Cisco Systems, Inc. - Special Call - NasdaqGS:CSCO

NasdaqGS:CSCO

Charles H. Robbins, the Chairman & CEO of Cisco Systems, Inc., made the following statements during the special call:

• Introduction and Context:

  • Thanked attendees for being present and acknowledged those watching remotely.
  • Mentioned the successful launch of the network intuitive in the same city in 2017 and expressed optimism about the success of the current announcement.

• Importance of the Day:

  • Described the day as significant and proud, noting that the announcement has been in development for over five years.

• Expectations for the Announcement:

  • Joked about the long development period, stating that if it took that long, the outcome better be good, and expressed confidence that attendees would agree with his assessment.

• Vision and Impact:

  • Discussed the company's efforts to create the backbone and foundational technology that will power future Internet applications and benefits for society.
  • Mentioned the evolution of the Internet and the emergence of various applications and services, from email to Web 2.0 and social media, and the ongoing innovation.

• Current Internet Statistics:

  • Noted that by 2023, there will be 49 billion devices connected to the Internet, with 4.8 billion users, and highlighted the average person will have 3.6 IP-connected devices.
  • Emphasized the doubling of traffic every 100 days and the magnitude of the challenge ahead.

• Future Innovations:

  • Mentioned the impending arrival of remote surgery, remote healthcare, autonomous vehicles, and drone delivery, and the need for more capacity, speed, and cost reduction.
  • Stressed the importance of simplifying operations and ensuring trust in technology.

• 5G and Network Evolution:

  • Discussed the role of 5G and the need for robust enterprise network services, emphasizing the importance of the announcement in enabling the potential of 5G.

• R&D Investment and Customer Focus:

  • Praised the team's dedication to a long-term R&D initiative and the focus on breakthrough innovation and flexible business models.

• Closing Remarks:

  • Expressed pride in the team and thanked attendees, introducing David Goeckeler to provide further details on the announcements.

David V. Goeckeler, the Former Executive VP and GM of Networking & Security Business at Cisco, made several comments during the Cisco Systems, Inc. Special Call on December 11, 2019. Below is a detailed summary of his remarks:

Opening Remarks

• David thanked Chuck Robbins for the introduction and expressed excitement about the event.
• He highlighted that the announcements were the result of years of development and collaboration with key customers and partners.

Innovation and Product Announcement

• David emphasized that Cisco only announces innovations when they are ready to ship a product.
• He introduced Benjamin Havey from Disney to discuss how the Internet and Cisco’s technology are transforming the entertainment industry.

Conversation with Benjamin Havey

• David engaged in a conversation with Benjamin Havey, VP of Innovation for Disney, focusing on how the Internet and Cisco’s innovations impact Disney’s business.
• He asked Benjamin about the importance of the Internet for Disney, the challenges and opportunities it presents, and how Disney collaborates with Cisco in their innovation lab (StudioLAB).

Cisco’s Strategy and Innovation

• David explained that Cisco invests heavily in R&D, focusing on three key areas: software, silicon, and optics.
• He introduced the new silicon platform, Cisco Silicon One, and the new routing portfolio, Cisco 8000, which are based on this silicon.
• David mentioned that optics are becoming increasingly important for building ultrafast networks and that Cisco is investing more in this area.
• He talked about flexible business models, emphasizing that Cisco is adapting to how customers want to consume its technology.

Silicon One and Cisco 8000

• David explained that Cisco Silicon One is a single networking silicon that can solve all the problems needed in different parts of the network, providing best-in-class performance across all segments.
• He introduced Eyal Dagan to discuss the technical details and breakthroughs behind Cisco Silicon One.

Conversation with Eyal Dagan

• David facilitated a discussion with Eyal Dagan, Executive Vice President of Strategic Projects, about the technical challenges and breakthroughs involved in developing Cisco Silicon One.
• They discussed how the silicon addresses the need for a single engine that can excel in various network segments, providing routing features, programmability, and high efficiency.

Cisco 8000 Portfolio

• David introduced Jonathan Davidson to discuss the Cisco 8000 portfolio, the first systems built using the new silicon.
• He highlighted the capabilities of the Cisco 8000 portfolio, including its scalability, power efficiency, and operational simplicity.

Panel Discussion

• David moderated a panel discussion with representatives from Microsoft, Facebook, AT&T, and Comcast, discussing their technology challenges and how Cisco’s innovations address these issues.
• He engaged with each panelist on topics such as network growth, white box approaches, disaggregation, and software-defined networking.

Optics Strategy

• David introduced Bill Gartner to discuss Cisco’s optics strategy and the importance of optics in driving down costs and enabling architectural transitions in data centers and service provider networks.

Conversation with Ryan Korte

• David facilitated a conversation with Ryan Korte from CenturyLink about how the innovations in routing and optics help in building more efficient network architectures.

Closing Remarks

• David summarized the key elements of Cisco’s strategy, emphasizing silicon innovation, optics, and software.
• He concluded by reiterating Cisco’s commitment to delivering innovation in various forms to meet customers’ diverse needs.

General Themes

• Throughout his remarks, David highlighted the importance of collaboration, innovation, and flexibility in addressing the evolving needs of customers and the industry.

Eyal Dagan provided insights into the development and capabilities of the Cisco Silicon One. Here’s a detailed summary of his comments:

• Starting the Project: Eyal Dagan mentioned that the project began around 5 to 6 years ago, in 2014, with the goal of not just creating another silicon but addressing a broader problem. The team aimed to develop an architecture that could serve various market segments effectively.

• Addressing Different Market Segments: The team aimed to create a single silicon that could meet the needs of different parts of the network, including access technology, the core, the edge, and Massive Scale Data Centers (MSDCs). This was considered a significant challenge because typically, different silicons are optimized for specific segments.

• Routing vs. Switching: Eyal explained the distinction between routing and switching silicons, with routing silicons featuring heavy feature sets, programmability, and high Quality of Service (QoS), while switching silicons focus on fast bit movement and energy efficiency. The goal was to create a silicon that could excel in both areas.

• The Impossible Problem: Eyal acknowledged the skepticism surrounding the project, as many believed it was impossible to create a silicon that could perform optimally across different network segments. However, the team aimed to distill the essence of routing and switching and integrate them effectively.

• The Universal Engine Analogy: Eyal used the analogy of a universal engine that could power various types of vehicles (scooters, cars, trucks, ships, jets) to illustrate the concept of a single silicon that could serve different network segments. This would simplify R&D efforts, streamline spare parts, and unify operational processes.

• Capabilities of Cisco Silicon One: Eyal confirmed that the Cisco Silicon One is capable of serving different market segments, specifically the service provider and MSDC markets. It is described as a routing chip with all the feature sets of a routing chip, including programmability and debuffering. However, it can also function efficiently as a switching device, with power efficiency that is on par or even 10-20% better than any other switching device.

• Power Efficiency: Eyal highlighted the silicon’s power efficiency as a significant breakthrough, noting that initial skepticism was focused on the silicon’s claimed power consumption. Customers initially measured the power consumption to verify the claims.

• Form Factors: The architecture of the silicon enables the creation of small form factors, large chassis, and clusters of routers capable of handling petabytes of bandwidth.

• First Device: Q100: Eyal introduced the first device built using this architecture, named Q100. It was sampled 2 years ago and is now being announced as it is shipping in the form of the Cisco 8000 product. The Q100 is a routing device with a global route scan capability and is programmable. Compared to the latest routing devices in the market, the Q100 offers twice the bandwidth and three times the packets per second, even 2 years after its sampling.

• Impact on Customers: Eyal explained that customers using this technology would experience a unified behavior and simplified operations across their networks. This would also lead to development simplification for Cisco and its partners, accelerating the pace of innovation.

Jonathan Davidson's remarks can be summarized as follows:

1. Introduction and Acknowledgment:

   • Expresses excitement about unveiling the Cisco 8000 series.
   • Acknowledges the hard work of the global engineering team.

2. Driver for Innovation:

   • Highlights the increasing demand for bandwidth due to growing video consumption.
   • Notes that Capital Expenditure (CapEx) budgets have remained relatively flat since 2012, necessitating more efficient use of existing infrastructure.
   • Emphasizes the need to address both CapEx and Operational Expenditure (OpEx) challenges.

3. Cisco 8000 Portfolio:

   • Describes the new family of platforms ranging from small 1RU systems to full 18-slot chassis.
   • Mentions the significant reduction in size and power consumption compared to previous generations.
   • Notes that the product has been shipping to select customers since October of the current year and will be generally available in the first half of the next calendar year.

4. Network Operating System:

   • Discusses the reimagined carrier-class network operating system, the first cloud-enhanced system for critical infrastructure.
   • Emphasizes simplicity, modern interfaces, and trustworthiness.
   • Explains how the system simplifies software through a leaner, customizable approach.
   • Introduces a cloud-based service that automates testing and validation, reducing the time to implement new innovations.

5. Trustworthy Systems:

   • Stresses the importance of hardware and software trust in critical infrastructure.
   • Describes the root of trust in hardware and the ability to validate the authenticity of software.
   • Mentions a cloud-based service that provides an immutable source of truth for validating the trustworthiness of network elements.

6. Cost and Efficiency:

   • Partners with ACG Research to demonstrate the significant reduction in operational costs and total cost of ownership.
   • Highlights the decrease in the time it takes to integrate innovation into infrastructure.

7. Panel Discussion:

   • Invites representatives from Microsoft, Facebook, AT&T, and Comcast to discuss their experiences and challenges.
   • Engages in a question-and-answer session with the panelists, covering topics such as technology hurdles, white box approaches, disaggregation, and the role of organizations like OCP and TIP.

8. Closing Remarks:

   • Thanks the panelists for their participation and insights.
   • Reiterates the importance of partnership and collaboration in addressing industry challenges.
   • Looks forward to continuing the partnership and addressing future needs.

These points capture the key messages and details shared by Jonathan Davidson during his presentation.