Cisco adapts to the rise of cloud computing (The Economist)

From a Cisco reality check

"But Cisco’s franchise is facing two threats. First, the more computing is done in the cloud, the less firms have to buy their own gear, including networking equipment. Instead of paying for an “end-to-end network” from Cisco, big cloud operators such as Amazon and Microsoft prefer gear that precisely fits their requirements. This is why Cisco’s cloud sales have disappointed, while more specialised vendors such as Arista have made inroads. The second threat is that software is increasingly important to how networks are run: that makes it easier for rivals to sidestep or overtake Cisco’s products.

Under Mr Robbins, Cisco has responded in several ways. It is offering tailor-made products to the big cloud providers. It has beefed up its software and services business and, to ensure more stable revenues, is making more of its products available as a subscription. Earlier this year the firm bought AppDynamics, which makes software to monitor the performance of corporate applications, and Viptela, whose programs manage networks, for $3.7bn and $610m respectively. Subscriptions and other recurring income now make up a tenth of Cisco’s revenues from products."

Cisco adapts to the rise of cloud computing