Cisco Systems Goes Big On The ‘Next’ Internet

By Patrick Moorhead - December 27, 2019
Cisco's "Economics of the Internet."

Cisco Systems launched a strategic initiative today to bring unprecedented scale to next generation networking and the Internet, dubbed the “Internet for the Future.” I would like to provide insights and summarize the three key components of the new strategy: custom silicon, optics and software enhancements. Our principal analyst Patrick Moorhead attended the event in San Francisco and I watched the spectacle on video. He will be doing a deeper drill-down on the new silicon, so stay tuned for that. 

Cisco's newly announced custom Silicon One architecture.

Silicon supporting programmability, performance, and ease of use   

Custom silicon is transforming the IT industry and Cisco is no different. In fact, Cisco has a long track record in demonstrating custom silicon leadership.

So why is that important? Custom silicon provides the ability to bring programmability into networking infrastructure and unlock future upgradability. Custom also means that it is unique—nobody else has it. From my perspective, “Cisco Silicon One” takes this to the next level. Cisco claims that this is the first networking silicon architecture of its kind, and is initially integrating it into its 8000 series carrier class routers. What’s important to note is that this will serve as the foundation for its product roadmap for the next decade, with its support for 10 Tbps and performance designed to deliver massive bandwidth, power efficiency and scalability. What I find powerful about One is its unified approach, eliminating the traditional use of multiple chips across networks and the infrastructure itself. The benefit to operators is consistency, which should equate to ease of management and accelerate the deployment of new applications and services. The proof is in acceptance, and Cisco reports it is in active trials with its 8000 Series with familiar names such as Comcast, Deutsche Telekom and Microsoft, among others. Google was quoted in its press release as well.

The key takeaway here is that Cisco Silicon One and the Cisco 8000 Series should allow service providers to more easily and quickly deploy future 5G services. The next generation architecture has the potential to provide these stakeholders a competitive advantage from an operational expense perspective, by easing management and providing headroom and investment protection for connectivity scalability.

Cisco's optics advantages.

Optics that drive massive scalability 

Optics are key to supporting the massive demands placed on Internet connectivity, from streaming services to cat videos on YouTube! There are only a handful of companies that possess the knowledge and capability to supply optical networking solutions and Cisco has long been a leader. In fact, many of the largest companies have failed to bring competitive solutions to the table. With this announcement, I believe the networking giant is taking its approach to the next level through a concept called silicon photonics. Silicon photonics has the potential to disrupt the economics of the optical world by significantly accelerating data throughput and bringing needed upside in scale. It delivers improved design and integration with a highly automated testing and manufacturing process. This results in higher yield, quality, price-performance value and long-term reliability for the Internet’s plumbing. 

The key takeaway is that Cisco’s investment in silicon photonics should provide it a disruptive means to stay ahead of competitors such as Ciena, Huawei Technologies and NEC, among others. The other benefits include the ability to deliver optical networking solutions at volume while maintaining high quality and reliability standards.

Cisco's newly announced IOS XR7.

Software simplification

Software’s impact on networking is dramatic. It brings needed agility, automation, visibility and improved management to network operators. Cisco aims to extend simplicity to the mix with the introduction of IOS XR7. The new operating system is designed to use half the traditional amount of memory and reduce its footprint by nearly the same measure. By utilizing a modern architecture with open APIs, IOS XR7 is poised to deliver significant improvements in boot times and faster download speeds. An added benefit is enhanced security—the OS offers new levels of boot protection and hardware enhancements such as chip-level protection, secured storage, validation of runtime processes and audit capabilities. 

The key takeaway is that Cisco is now a demonstrated leader in software-defined networking, thanks to its focus on an overarching intent-based networking strategy under the helm of CEO Chuck Robbins. Its open API approach and investment in its DevNet developer community are key proof points. Numerous acquisitions over the years resulted in a number of operating systems and a mix of legacy and modern software architectures. IOS XR7 represents a concerted effort to address this challenge and provide improved performance and security in an age of GDPR and privacy concerns. 

Wrapping up

I’m impressed with Cisco’s enhancements to its silicon capabilities, optics and software. It’s a unified approach that should deliver needed scale for future connectivity. Given the expected massive growth of IoT and data across networks out to the edge, I believe the company is well positioned to deliver the required performance for next generation applications and workloads cross-domain, cloud and on-premise. If Cisco can execute successfully on this new strategy, the biggest loser is likely Juniper Networks. Juniper has a nearly singular focus on the service provider market, and as a result, its gross revenue performance has flatlined for the past eight years. Based on its historical track record, I have no doubt that Cisco can leverage its strong leadership team, significant financial resources and engineering expertise to take share in the service provider space.   

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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.