back to article Cisco to sell everything-as-a-service – even core networking hardware – and cut costs by a billion bucks

Cisco CEO Chuck Robbins says his IT giant is considering an as-a-service offering for its core networking hardware. Speaking on the company’s Q4 2020 earnings call, Robbins’ first duty was to detail quarterly revenue of $12.2bn, a nine percent year-on-year drop, and a five percent dip in annual revenue to $49.3bn. Both falls …

  1. HildyJ Silver badge
    WTF?

    Doesn't add up

    So according to Cisco they're going to accelerate their investments by cutting their costs by $1 billion. As corporate statements go, that isn't just rosy, it's ridiculous.

    P.S I'll be happy when earning season is over.

    1. joesomeone
      Devil

      Re: Doesn't add up

      Don't worry.. in about three months from now, we'll be back here with new corporate statements.

    2. NoneSuch Silver badge
      Thumb Down

      Re: Doesn't add up

      “I'd say that it's clear that many of our customers do want to consume the technology as a service,”

      Not me and I don't know anyone who does want a continuous outlay of cash for a spare switches unplugged and sitting in a corner.

      Just let me buy the darned switches. I don't need someone dipping into my pocket every month. I already have a girlfriend.

  2. Snake Silver badge

    "Hardware as a 'service'."

    Is "rental" with corporate speak attached.

    The entire world hates cable companies for doing it, but Cisco calls it a "aaS" and we're all supposed to smile.

    I'm sure that somewhere a pencil-pusher will claim it will be a good idea, both inside Cisco for making it and outside for subscribing...but we can hope that, instead, Cisco goes belly-up from it, rather than the idea spreading and we all end up renting our entire lives away.

    1. Anonymous Coward
      Anonymous Coward

      Re: "Hardware as a 'service'."

      Yeah, I agree; I don't get this push to Everything-aaS - and Cisco are by far not the only one that are doing it. We, the customers, have been trying to tell Cisco (and others) for years that we don't want shift even more of our expenditure from CAPEX to OPEX - we want it the other way around! Give us more CAPEX, and let us own the equipment outright. We're already subject to an obligatory support contract cost (which, depending on if you purchase multiple years up fron, MAY be capitalized), and now we're being pushed towards equipment rental? At least give us OPTIONS.

      But I guess this is a logical next step for those who fervently believe that Agile can be applied to everything, including network operations...

      Anon because, well, I work for an ISP that thinks that Agile can be applied to everything.

      1. Chris G Silver badge

        Re: "Hardware as a 'service'."

        Is leasing by any other name, with all the disadvantages of lock in that entails.

        Decades ago it wasn't a benefit with copiers and typewriters and it will be no better now.

        At least with Capex you can write off against depreciation and still own it at the end of the day.

        With lease/rental you are at the mercy of the vendors, locked in to a service and possibly consumables deal and with software with the vurrent norms, likely to be nailed down to a per user basis as fixed period unlimited use contracts are not favoured by most vendors.

        1. Jellied Eel Silver badge

          Re: "Hardware as a 'service'."

          Is leasing by any other name, with all the disadvantages of lock in that entails.

          I don't get how this will help either Cisco's channel, or hit their $1bn savings. I'm guessing it'll be something like the car business, where manufacturers sell to their finance companies, who lease to users. So if this means Cisco will sell tin to FinCo, who'll then lease to.. releasers, who then pass the lease on to the end users. And then what will happen to used tin once the lease expires. Cisco's never been very keen on allowing used tin, and nor would many end-users.. But the way Cisco's turned assets into liabilities has never been very customer friendly.

        2. hoola Silver badge

          Re: "Hardware as a 'service'."

          I am sure that it will have a fixed term beyond which the hardware has to be replaced regardless of whether it needs to be.

          This is all about maintaining revenues, user lock-in and market share. At least if you own the hardware (anybody's hardware), you can get third party maintenance if you want to cut your costs and extend the life of the kit.

          The only winners will be Cisco,

    2. Yes Me Silver badge
      Headmaster

      Re: "Hardware as a 'service'."

      "technology-as-a-service" is the actual buzzword they're using. It's how IBM became a near-monopolist in the old days: you couldn't buy Hollerith card processing equipment or early computers like the IBM 650, because IBM refused to sell them. And guess what, the rental costs were enormous...

      Until, that is, IBM was forced by US anti-trust law to sell stuff too. In 1956.

      Memories are short, apparently.

      Wikipedia's version

  3. Anonymous Coward
    Anonymous Coward

    Selling it as a service doesn't make it cheaper, especially in the log term. I doubt even the most rusted on corporate customer will see straight through this snake oil.

    1. AMBxx Silver badge

      As a service can only be cheaper if you need flexibility to reduce your requirements at short notice. I just don't see that happening with hardware.

      'It could be cheaper as a service' is up there with 'the cheque's in the post'

  4. teacake

    "I'd say that it's clear that many of our customers do want to consume the technology as a service"...

    I doubt that. There's a difference between wanting something and being railroaded towards it because your vendor makes all other paths increasingly difficult to follow. Cisco are doing the classic move of just making everything hinge around the way they want their customers to "consume the technology" i.e.put them on the conveyor belt of endless contracted payments and replacement cycles as Cisco want to define them, and compulsory software and licences alongside the hardware, even if the customer doesn't use it. They just hope that enough customers will go along as the path of least resistance, rather than endlessly swim against the tide of an increasingly prescriptive licensing model. If we don't even own the kit at the end of it, that would be the icing on a pretty unpalatable cake.

    The thing is... other vendors exist, and if they are more accommodating of how customers actually want to work, it will reach a stage where we will just say it's better long-term to bite the bullet and change vendors. Cisco are just trying to keep the annoyance factor slightly below the threshold where those thoughts start to kick in.

    1. Wellyboot Silver badge

      >>>Cisco are just trying to keep the annoyance factor slightly below the threshold<<<

      Increasingly they are failing.

      Fully agree with you on >bite the bullet and change vendors< they're using the old MS ploy of 'Too much effort to change it all now', it won't work for much longer.

      Its' not fun trying to run a 24/7 time sensitive manufacturing operation when the Borgs first response to almost any TAC case is update the firmware (production outage costing £$£$£) because switch IOS is so bug ridden now.

      Cisco made their name with quality kit that could quite literally run for many years straight without needing a service restart (let alone a power cycle), Beancounting has ruined them.

      1. sanmigueelbeer Silver badge

        Its' not fun trying to run a 24/7 time sensitive manufacturing operation when the Borgs first response to almost any TAC case is update the firmware (production outage costing £$£$£) because switch IOS is so bug ridden now.

        We are still using 2960S and 3750X. Why? Because their OS are stable. Period.

        I cannot say the same for the 3650/3850 and Catalyst 9k: I spend each week opening TAC Cases for bugs that suddenly "resurrected" from previous releases.

        We are actually thinking of going to the used switch market and buying as many 2960S & 3750X because, frankly, we really have no faith in the Catalyst 9k.

        NOTE: Catalyst 1k is off the table due to stacking. (Yes, we know about the switch clustering, aka Horizontal Stacking, aka Single IP Management.)

  5. A Non e-mouse Silver badge

    Cisco As a Service

    Cisco's current network-as-a-service offering is that you buy the hardware (with bare minimum feature set) as normal, but the advanced feature sets are subscription services. Stop paying and your switch/router goes dumb.

    1. Mike 137 Silver badge

      Re: Cisco As a Service

      "Stop paying and your switch/router goes dumb"

      or your firewall stops working (let's just hope it blocks all rather than opening wide).

      As so many subscription services are constantly showing, they make running a business fragile. The only beneficiaries are the vendors, who get a constant revenue stream. Furthermore, as "upgrades" (both hardware and software) become an automatic part of the deal, there's even less incentive to get them right as they can be swapped out instead of fixed if proved faulty. So we progress another step towards infrastructure collapse in the name of profit (for some).

      I remember when both Cisco and Netgear provided rock solid technologies. Not any more.

      1. Tony J Smith

        Re: Cisco As a Service

        Yes, that's what happens with their Meraki gear. It becomes a useless brick without a subscription. The only benefit to it is that they'll give you some free hardware samples if you watch their webinars, which you can later slap DD-WRT or OpenWrt on (if it's a supported model).

        1. Calum Morrison

          Re: Cisco As a Service

          Hah! I sat through one of those things once years ago and didn't even get the free kit. By all accounts, I didn't miss out. Having to pay license fees after a few years or replace for about the same cost? F*ck that.

          I got an unusual message from a friend a few weeks ago about Meraki gear; she's a teacher with no IT interest, but runs a Facebook buy and sell group. They get inundated with Meraki gear apparently, presumably as people try and shift gear that suddenly needs licensed or that was sent out for watching their sales pitch.

          As well as being against what true geeks would do (sweat old kit til it really needs replacing, not just because it's lost its shine), this kind of business model is an eco catastrophe in waiting.

  6. Marty McFly Silver badge
    Facepalm

    This will happen, and companies will love it

    The average life of a CIO is something like three years. Happens every time. In their third year they cut expenses to the bone. Moving to a Cisco subscription will be part of that. Then they parachute out with a fat bonus for how good they did at controlling costs. New CIO shows up. Followed shortly with Cisco announcing a pricing 'uplift' to align with 'industry norms'.

    Don't think Cisco doesn't know how IT & buying works. Management will love it. Only us techies who endure the cycles will see the corporate stupidity of it all.

  7. Anonymous Coward
    Anonymous Coward

    Too right it don't add up.

    So we have a pandemic causing a massive shift to working from home increasing the demand for. Infrastructure.

    A company that provides networking infrastructure blames the cause of this massive increase in demand on being unable to improve sales.

    I think some shareholders should be querying the bullshit.

  8. TheInstigator

    They're still selling stuff in China ?

    I would have thought they'd have withdrawn out of China by now

  9. ecofeco Silver badge

    Time to find a new vendor

    Goodbye CISCO.

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