Cisco CEO Chuck Robbins says the networking and software giant is looking at turning its core networking hardware into an as-a-service offering.
Speaking on the company’s Q4 2020 earnings call*, Robbins hinted at the shift to an as-a-service offering while detailing a nine per cent year-over-year drop in quarterly revenue ($12.2 billion). This also led to a drop in annual revenue, to $49.3 billion.
“At the same time, we’re going to rebalance our R&D investments to focus on key areas that will position us well for the future. More specifically, we will accelerate the transition of the majority of our portfolio to be delivered as a service,” Robbins said. “I’d say that it’s clear that many of our customers do want to consume the technology as a service, so we’re currently looking at the entire portfolio to see how deeply we can get into the portfolio relative to delivering as a service, and I think we’ll have a lot of that in the marketplace by the end of the calendar year.”
Robbins says 51 per cent of Cisco’s revenue came from software and service in FY 2020, just exceeding its target of 50 per cent. Also, nearly 80 per cent of its software revenue is sold as a subscription. Robbins says that beats their target of 66 per cent. Security sales were also up 10 per cent.
But there were declines across switching, routing, data centre, and wireless, he adds. Driven by the wobbly commercial and enterprise markets, as well as DRAM price declines, Robbins says infrastructure revenue fell by 16 per cent.
“The past six months have unquestionably reshaped our world. Industries, governments, and work have changed dramatically, and many of these changes will become permanent,” he said.