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Outgoing Cisco CEO John Chambers was not mincing words after his company reported surprisingly strong financial results Wednesday.
He said the “software defined network” approaches now being used by companies like Facebook and VMWare are not a threat to Cisco or its current 61 percent profit margins.
Software-defined networks (SDN) are managed by lightweight software running on low-cost servers. Some believe that this approach to enterprise networks could make the expensive custom software and network gear sold by Cisco less necessary.
VMWare has an SDN solution called NSX that it’s been selling for 19 months. In a blog post today, VMWare said it now has 400 customers using NSX. Fifty of those companies, the blog post said, are deploying NSX aggressively, already spending more than a million dollars apiece.
However, match that against Cisco’s $3.6 billion in revenue from switch sales last quarter alone, and you’ll see that the SDN business has a long way to go.
Chambers says Cisco’s first quarter financial results are proof that SDN won’t hurt Cisco anytime soon.
“When you have switching revenues up 11 percent last quarter and up 6 percent this quarter, it’s off the charts,” Chambers said. “We are a cash and profit machine.”
Veteran Cisco salesman Chuck Robbins will take over for Chambers as CEO July 26. Robbins was chosen because Cisco believes he has the stuff to defend Cisco against increasing competition from smaller enterprise network software makers.
Hat tip: Business Insider
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