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pww.comCisco Systems, Inc., Northland Securities, Inc. - Special Call - SEHK:4333

SEHK:4333

Mike Flannagan [Executives] 💬

Mike Flannagan, the VP and General Manager of Cisco's Data Analytics practice, discussed several key points during the special call:

  1. Safe Harbor Statement: Mike began by acknowledging the Safe Harbor statement, emphasizing that the discussion would include forward-looking statements subject to risks and uncertainties, as detailed in Cisco’s SEC filings.

  2. Total Market Opportunity:

    • Cisco sees a significant economic value creation opportunity around the Internet of Everything (IoE), estimated at $19 trillion.
    • More than $7 trillion of this value is expected to come directly from better use of data and analytics.

  3. Customer Challenges:

    • A recent survey of 1,200 Cisco customers revealed that over 40% of their challenges in realizing value from the Internet of Things (IoT) were related to data management and utilization.

  4. Shift in Data Creation:

    • Historically, data was primarily created and managed in centralized data centers.
    • With the rise of digital enterprises and IoT, data is increasingly being created at the edge of networks, requiring a shift to more decentralized data processing and analysis methods.

  5. Analytics Evolution:

    • Analytics 1.0: Dealt with structured data stored in databases and data warehouses.
    • Analytics 2.0: Emergence of big data to handle unstructured data from sources like social media.
    • Analytics 3.0: Incorporates data from the edge, such as real-time streaming data, into analytics.

  6. Cisco's Architecture:

    • Cisco's architecture supports Analytics 3.0 through investments in infrastructure from the data center to the edge, including cloud and inter-cloud technologies.

  7. Connected Analytics Portfolio:

    • The portfolio includes software assets obtained through acquisitions, such as Composite Software for data virtualization, Truviso for streaming analytics, and Tidal Software for workload automation.
    • Different commercial models are available for the software packages, including perpetual licenses and Software-as-a-Service (SaaS).

  8. Horizontal Capabilities and Vertical Use Cases:

    • Horizontal capabilities include network analytics, collaboration analytics, and location analytics.
    • Vertical use cases, such as retail and events, combine multiple capabilities to solve specific business problems.

  9. Customer Use Cases:

    • Collaboration Analytics: Helps customers understand travel savings and carbon footprint reduction by using Cisco’s collaboration tools.
    • Retail Analytics: Uses location and video analytics to optimize checkout processes, reducing customer abandonment and labor costs.

  10. Differentiation:

    • Cisco's deep understanding of its own infrastructure allows it to extract valuable insights from data that customers might not otherwise utilize.
    • Hyper-distributed data processing capabilities enable analytics use cases that would not be feasible with centralized approaches.

  11. Partnerships and Competition:

    • Cisco focuses on areas where it can leverage its unique capabilities and installed base.
    • Partnerships are prioritized in areas where there is already strong competition or established technologies.

  12. Financial Profile:

    • Analytics revenues are currently small but expected to grow significantly.
    • Margins are software-driven, with services playing a role in initial implementations and custom solutions.
    • The total addressable market for analytics is estimated between $30 billion and $50 billion.

  13. Privacy Concerns:

    • Retail analytics uses aggregated and anonymized data to protect customer privacy.
    • Any personally identifiable information is handled according to privacy agreements between retailers and their customers.

  14. Software Focus:

    • Cisco is committed to expanding its software and services business, including through initiatives like Cisco ONE, which integrates network analytics software.

Overall, Mike emphasized Cisco's strategic approach to leveraging its unique infrastructure and expertise to deliver differentiated analytics solutions that address the evolving needs of customers in the IoT era.

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