The Six Five team discusses Cisco Live 2024.
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Transcript:
Daniel Newman: Cisco Live though, Pat, we weren’t there, but you had people there on the ground, I had people there on the ground. What were your big takeaways?
Patrick Moorhead: Yeah, so very similar of what we’ve seen for infrastructure and software companies. The big event is all about how AI gets integrated into everything. And Cisco Live 2024, it was exactly that. AI integrated into what they call the digital experience, into security and into observability. A good example of this was AI power ThousandEyes and AI integration into Cisco network and cloud. The company also came out with the announcement of Cisco Hypershield. Basically, a new architecture that it’s a distributed security architecture that goes across the hybrid multi-cloud, and that includes SaaS, that includes infrastructure, it includes cloud, colo.
And Dan, you know I love these hybrid multi-cloud combinations, because essentially means you can make money regardless of where any of the compute or the storage is happening. So a really interesting alliance between Cisco and NVIDIA too, called Nexus HyperFabric AI cluster. It’s essentially NVIDIA showing how they can play in this networking game like we’ve seen with the likes of Broadcom and also Marvell. And heck, they might even be powering that. But I am sure there is some integration of Cisco’s own Silicon as well.
Daniel Newman: Yeah. Look, a couple things. One is a partnership with NVIDIA should never be a surprise to anyone at any point at this particular juncture. It’s a-
Patrick Moorhead: Come on, Dan, it’s novel. Nobody’s doing that.
Daniel Newman: It’s actually key to survival at this point. There’s a survival consideration that some CEOs are now aware of about being able to align with a company with that kind of momentum. You can’t make that up. But the overall space is, look, there’s about 20 to 25% of that spend on AI infrastructure is going to fall into networking. That’s a significant opportunity for Cisco. Over the past couple of earnings, you and I have went on to the fact that Cisco is a company in transition. By the way, a lot of people have enjoyed laying over the Cisco chart.
Patrick Moorhead: Yes.
Daniel Newman: Have you seen that all over the internet?
Patrick Moorhead: I brought that up. Dude, I brought that up 18 months ago. Cisco was the builder of the internet.
Daniel Newman: Yep. And now we’re building an AI internet. But the point is, is that you got to route the data, move the data, and Cisco still has a pretty strong position. Cisco’s battling an emboldened Arista that’s been on a pretty big growth terror, and is fighting for market share. It’s been battling by pivoting to more software, more services, more recurring revenue. Cisco’s done a really good job in its strategy to get what? Over 50% of its revenue is now software, and the significance of its ARR is becoming palpable. Hasn’t really impacted the company’s valuation as much as I think it would like it to, but I think that required pivot has been made. And I think Chuck’s getting some mileage out of that.
The early close on Splunk has been good. That was an important transition, it got a lot of attention there. When we have all this data across the network, the ability to observe it and act on it quickly was always part of the vision. I thought getting that done, having that out and being able to really lean into that at Cisco Live was important as well. The overall state of Cisco, it has a big role to play, Pat. It has a big role to play across this transition that’s going on to AI. The network is going to be palpable. The network at the edge is going to be substantial. We’ve definitely got the opportunity for Cisco to gain momentum and attach to this particular trend line, and it’s doing it through diversification. So it was an overall solid Cisco Live, Pat. Hopefully, you and I and the calendars will allow us to be… I’d like to get back next year.
Patrick Moorhead: Totally.
Daniel Newman: Like I said, our team was there, appreciated all the great coverage from the folks across our teams that were there. And like I said, keep an eye on this one. We need to see that attach to AI revenue growth, and that’s what the market’s going to be looking for.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
