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pww.comCisco Systems, Inc. Presents at UBS Global Technology Conference 2015, Nov-18-2015 10:45 AM - SEHK:4333

SEHK:4333

Nick Earle [Former Senior Vice President of Global Cloud and Managed Services Sales] 💬

Nick Earle, the former Senior Vice President of Global Cloud and Managed Services Sales at Cisco Systems, Inc., provided insights into Cisco's strategies and developments during his presentation at the UBS Global Technology Conference 2015. Here is a detailed summary of his remarks:

Key Points Covered by Nick Earle

  1. Role and Focus

    • Runs the cross-company initiative focused on the move towards software-managed services and cloud.
    • His role does not involve the hardware side but focuses on driving efforts to transition Cisco into a company based on annuity revenue.

  2. Business Performance

    • In Q1, Cisco reported a 4% revenue increase and a 9% increase in earnings per share.
    • Operating income reached a record 30.5%.
    • Noted a significant increase in deferred revenue coming from software, services, and subscriptions.

  3. Strategy Shift

    • Cisco is transitioning from a company where 75% of revenue was transactional to one where a significant portion is recurring revenue.
    • The focus is on building a recurring revenue model for products traditionally sold transactionally.

  4. Acquisition Strategy

    • Shifted from acquiring hardware companies to filling gaps in offerings to acquiring software and cloud companies.
    • Recent acquisitions are smaller and more frequent, with a record of three acquisitions in one week.

  5. Cloud Strategy

    • Cisco's cloud strategy, called InterCloud, differs from Amazon's model by focusing on hybrid cloud solutions.
    • Instead of building data centers, Cisco leverages its network-centric partner ecosystem to build an ecosystem of nodes.

  6. Market Trends

    • Public cloud is growing, but the connectivity and data at the edge of the network are becoming more significant.
    • Exponential growth in connected devices and operational technology environments is generating vast amounts of data.
    • Hybrid cloud is becoming critical as IT loses control over cloud access.

  7. InterCloud Strategy

    • 64 service providers have signed up for InterCloud, with 350 data centers across 50 countries linked together.
    • The strategy aims to solve five key problems: security extension, application policy, policy export, hybrid IT, and edge access.

  8. Financial Impact

    • Public cloud providers' growth positively impacts Cisco as the leading infrastructure supplier.
    • Private cloud growth is significant, with 98% of companies yet to build a private cloud.
    • Cisco's data center business (UCS) grew by 24%.

  9. **Software and Licensing

    • Introduced Cisco ONE, a new structure for bundling software through enterprise licensing agreements.
    • 3,000 customers have adopted Cisco ONE, with 45% penetration and double the software purchases compared to standalone components.

  10. Total Addressable Market (TAM)

    • Private cloud market is estimated at $12 billion and growing at 17%.
    • Hosted private cloud market is valued at $40 billion.
    • Multi-cloud management market is around $3 billion, projected to reach $8 billion.

  11. Application Development

    • Traditional applications (Oracle, SAP) use virtualization.
    • New cloud-native applications use containers, Docker, Kubernetes, and microservices.

  12. New Offerings

    • Introduced a new stack called Metapod, similar to AWS experience behind the firewall.
    • Targeting the hyperscale application development market, with 45% of enterprises expected to adopt this approach.

  13. Virtual Managed Services (VMS)

    • Enables service providers to create new services quickly using the programmable network.
    • Reduces the need for physical upgrades and installations.

  14. Hybrid Cloud Vision

    • Focus on connecting various cloud environments seamlessly, ensuring compliance, controls, security, and centralized management.

  15. Analytics and Digitization

    • Real-time streaming analytics from the edge is key for industries like retail.
    • Investing in real-time streaming analytics to leverage data from 50 billion connected devices.
    • Edge analytics TAM is estimated at $17 billion.

  16. Business Model Transition

    • Moving from selling hardware and maintenance to recurring and managed services.
    • Requires significant changes in product engineering, sales force compensation, channel incentives, and IT tools.

  17. Differentiation from Competitors

    • Cisco's approach contrasts with competitors like IBM, HP, and EMC-Dell.
    • Focuses on leveraging partnerships and avoiding the high stakes of building data centers globally.
    • Addresses data sovereignty concerns through a partner ecosystem.

  18. Closing Remarks

    • Cisco is undergoing a multiyear journey to build a strong presence in hybrid cloud, analytics, and edge computing.

    • The opportunity at the edge is massive and represents a significant growth area for the company.

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