From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR, this is "Breaking Analysis" with Dave Vellante. With a nearly $60 billion revenue run rate growing at 14% and throwing off over $5 billion in operating cash last quarter, Cisco has an awesome business. But customers are vocal about the complexity of Cisco's portfolio, and if not addressed head-on, the company risks encountering friction beyond just economic headwinds. We believe Cisco's challenges are most decidedly not product breadth and depth, rather the company's mandate is to integrate the piece parts of its intricate offerings to create more facile and seamless experiences for customers. Hello and welcome to this week's "Wikibon CUBE Insights" powered by ETR. In this "Breaking Analysis" and ahead of Cisco Live US, we dig deeper into Cisco's business and double-click on three key areas of its portfolio, including security, networking, and observability, with spending data from ETR and a guest appearance from SiliconANGLE contributor and market watcher, Zeus Kerravala, principal at ZK Research. Zeus, thanks for coming in the studio. It's always good to have you. Yeah, it's always great to be on theCUBE, so thanks for having me back. You're very welcome, all right, let's start by doing some stock market comparisons. It's always good to get some context. This chart shows year-to-date comps between Cisco, Palo Alto Networks, Arista, Extreme Networks, and the Nasdaq Composite. And as you can see, the pure plays, as well as the Nas, are outperforming Cisco by a pretty wide margin. This despite double-digit growth last quarter, 65% gross margins and a $200 billion market cap. And the reason is CEO Chuck Robbins set, quote, unquote, "modest expectations" for 2024, which when modeled out suggest actually slowing momentum in the near to mid-term. In addition, we believe the breadth of Cisco's portfolio, while it's a key strength, also creates adoption challenges for the company's customers. Zeus, pure plays like Arista, Extreme, Zscaler, CrowdStrike, Palo Alto Networks, Cisco often sort of criticized those as point products, that's debatable, by the way, and they are simpler in theory for customers to understand, by the way, that's also getting fuzzier. What's your take on this? Yeah, it's a hard comparison, because you're comparing a $60 billion company whose cash generation every quarter is bigger than the annual revenue of all those other companies you showed up there, right? Now, with that being said, I do think the list of comps you put up there is fair but not holistic. And it's easy for an Arista or an Extreme to catch the tailwinds of a secular trend, where that's much harder for Cisco because of the breadth of their business. So if you rolled back the clock two years ago, and you had compared them against, say, a Zoom or a RingCentral, Cisco would've looked horrible from a stock perspective compared to those companies. But now, fast-forward two years, and that whole UCaaS, CCaaS sector has fallen off, right? And so, because of the breadth of Cisco, they're very stable, they're a safe investment from a Wall Street perspective, but you're not going to get the growth that you see from one of these smaller players, because it's hard for them to fire on all cylinders, right? I've always said Cisco always tends to be like an eight-cylinder car that fires on six cylinders, because of the structure of their businesses and how broad they are, and how many different markets they're in, it's unlikely that all of those things will work at once. You know, it's like when you think about the way a VC thinks versus the way a private equity say thinks, let's say, or a late-stage investor coming in at like a Series F, that late-stage investor's probably thrilled if they get a 2x return at an IPO when they're putting in bigger dollars. Whereas the VC may be putting in smaller dollars, even though there for a while it was pretty big, but they're looking for 100x or 1000x returns. And so that's really the difference. And with Cisco, you get a dividend, they're obviously doing buybacks with their stock, so it's a safer bet. You're just not going to see those types of returns. >> Yeah, and some of the UCaaS, CCaaS sector, as I mentioned, they've seen 90% of the market cap fall off. You're not going to see that with Cisco's business because they are protected by the strength of their business. But that protection also acts as a gate, so they're not going to grow at the same rate, right? And with that being said, though, I do think if they had tighter integration across their products, which we're going to talk about, would actually allow Cisco to see more growth. And I also think that when you look at some of the Wall Street estimates around Cisco, I believe that most Wall Street analysts don't believe that some of the bigger trends, like more cloud and things like that, actually benefit Cisco, and I think that's part of Cisco's mission is to educate as to why that's the case. I think a lot of people look at them as an on-prem infrastructure vendor that is gated by the shift from on-prem to Cloud. All right, well let's take a look at the sort of portfolio, at least the lines of business as Cisco reports its financials. As we said at the top, 14% revenue growth is pretty astounding for a company of Cisco's size. Especially the top line. Secure, agile networks is at $7.5 billion, grew almost 30%. Yeah, so this is how Cisco, if they break down the business. So let's go through this. So, you know, this portfolio, well. Secure, agile networks, that's core networking, switching, routing, wireless, and compute. So that's what Catalyst, Nexus, Meraki, all the SD-WAN stuff, right? >> Yes. The internet for the future, these are really marketing terms, but it's the optical networking and 5G, all that silicon stuff. Yeah, it's web scale and telco. Okay, great, and then the collaboration is Webex. They got call center solutions. And then, they got security, they call it end-to-end security, they can't just say security. You know, and that's a variety of areas including, you know, all the zero-trust stuff and threat management, endpoint, network security, cloud security, and then what they call optimized application experiences. That's the observability stuff, AppD, ThousandEyes, Intersight. How do you think about Cisco's portfolio and how can the company, you know, you just wrote about this recently, simplify the buyer experience? Yeah, within each of those groups, Cisco has some great products, right? But I think where they've struggled is to create better interoperability and cross-platform optimization. And I've talked about this. It's like, why doesn't Webex on a Cisco network create a disproportionately better experience than say running Teams on a Cisco network or Zooms on a Cisco network? It's all one company, right? Even within the portfolio, Meraki and Catalyst have always been sold as two separate lines. Now, at last year's Cisco Live, after nine years of owning Meraki, they finally allowed customers to see Catalyst devices in the Meraki dashboard. And you could argue, why'd that take nine years to do? Well, it had different general managers. And when they finally rolled it up into Todd Nightingale, you know, low and behold, all of a sudden there's interoperability.

So I think the political dynamics and the business unit structure does create a lot of competitiveness within those individual groups. Now, of course, mass scale or internet for the future and secure, agile networks all roll up to Jon Davidson, and so we should see better interoperability between the telco side and the enterprise side. But I do think that from a Cisco perspective, as you started off talking about product breadth and product depth, they've got some great products. Kenna's a great product. AnyConnect's a great product. Talos is a great product, Meraki, Catalyst. But it doesn't create a Cisco platform story. And I think they're taking steps to address that. At RSA, they announced their XDR solution, which is the first cross-security solution they're coming out with. I believe at Cisco Live we'll see more of that. And that's really where they should be focused at, is how do they make the Cisco portfolio a one plus one equals three experience versus having to go compete, you know, in a knife fight, against all the other pure plays. 'Cause that's a very heavy ask from the sales force to understand the competitive difference of every product versus every competitor. It sounds like it's a mandate within the company now. It is. >> You've got leaders that are pushing for that. Obviously, Chuck Robbins wants to see that. Remember EMC, they actually failed to do that type of integration too, I know they were half the size of Cisco. And Cisco's really, I think, you know, got to show that and we'll see at Cisco Live. Let's take a look at some of the ETR spending data at a high level we'll show you the- And I do think Jeetu Patel is one of the big changes, that he always talks about the experience should be 10x better than everybody else. Not incrementally better, but significantly better, right? Well, to your point, Webex on Cisco should run materially better, right? >> Yes, yes. Does it today? >> No. Okay, so they got to work on that. Okay, let's take a look at some of the ETR data at a high level and talk about the spending momentum. This is a candlestick chart and it shows the granularity of Net Scores, which is ERT's proprietary spending methodology. So it measures customer spending patterns. The 1,700 IT decision makers in the most recent IT survey, and there's more than 1,000 of those are Cisco customers, so it's a nice sample. That lime green at the top, that's the percentage of customers that are adding new. The forest green represents the percent of customers spending 6% or more relative to last year. The gray is flat spend. The pink is spending down 6% or worse. And the bright red is churns. You subtract the reds from the greens and you get Net Score, which is that blue line, and you can see the declining trajectory there. And the brown line is pervasiveness in the data set, it's like mindset, mind share, market share within the data set, and that's actually held up really well.

I mean, Cisco's got a massive install base and it's stable. Although more customers are leaving, that bright red than are being added, that lime green in this survey. But this doesn't measure actual spending dollars. It's only the percent of customers in each bucket. So, Zeus, in your view, does this accurately reflect what's going on in the market? Is the deceleration, in your view, a function of the economic headwinds? Is it the complexity of the portfolio, both? I think it's both, and I think also the competitive dynamics have changed. You know, a decade ago we used to joke in the networking industry that it was Cisco and the seven dwarfs, they were competing with 3Com, Nortel, companies like that, that really couldn't execute their way out of a paper bag properly, right? Today, if you look at networking, Arista's a formidable competitor. Fortinet has moved into the networking space. VMware has moved into the networking space, right? So it's not the same, you know, seven dwarves that Cisco used to have as competitors in networking. There are some really big competitors. Even Extreme Networks is now a billion dollars in revenue, right? They've rolled up a lot of the also-rans and created a very nice company. And the cloud guys. >> Yeah. Yeah, the cloud guys are in networking. Aruba is part of the bigger HP. They can drop in some sales, you know, and create a nice as-a-service sale. So I do think a lot of what you're looking at there is the fact that there are more credible vendors, and that requires much sharper sales execution than it did before, because you can't just go and compete, you know, on the fact that the other companies are going to mis-execute, which is what they did for a long time. Well, another reason to simplify, at least help the salespeople, you know, reduce friction in terms of the go to market. Yeah, yeah, well, and, in fact, it's easier to sell a platform than it is to try and sell best of breed, right? And we talked about this Palo Alto's event. Their challenge is to do that as well. And I think, you know, from a Cisco perspective, Cisco security on a Cisco network, that's really Cisco's mission. How do you leverage? There's still 50% of the install base of networking gear is Cisco gear, and how do you leverage that install base to sell more security, to sell more collab, right? To sell more, you know, AppD and ThousandEyes, things like that. And so they have that big install base, that network telemetry, they got more of it than anybody else. And now they've got to be able to use that to drive value into other products. I think their XDR announcement at RSA was a good example of that, but they need more of those type of things. And that's a compelling value proposition for customers, especially in the Cisco shops. All right, let's drill into some of the segment data. This chart shows Net Score spending velocity, again, on the vertical access and pervasiveness in the data set on the horizontal, the red dotted line at 40%. Anything over that is highly, highly elevated from a Net Score perspective. And we've highlighted Cisco overall and Meraki, a company Cisco bought in 2012. See the fact that Cisco and Meraki are two separate things highlights a problem, right? And the fact that ETR can actually survey for that, because that's what customers see. So yes, oftentimes when a company makes an acquisition, you'll see those lines disappear. It hasn't with Meraki. So this really, so Meraki really was bought, like I say, a while ago, and it took a long time to integrate. So Cisco stands out though as a clear leader here in both presence with a very solid, you know, vertical momentum. In fact, we saw earlier 29% year-on-year revenue growth figure in the core networking business. Amazing for such a large business. So Cisco, you know, the obviously working through the backlog. And as you can see a number of other companies in here, including HPE's Aruba, you mentioned them, Arista, you talked about them, the VMware with NSX, and a bunch of others. Break down the competition in this space for us, and how will Cisco simplify here? Well, I think this is where, from a customer perspective, thinking about Meraki versus Catalyst is a bad thing, right? They should have one line of hardware, one line of access points. And then, if I want to manage it through Meraki, I can, if I want to manage it through CLI, I can. 'Cause right now, if I invest heavily in Meraki, and then I decide, "Oh, I want to switch to Catalyst," I got to rip all of the stuff out and put all new stuff in, right? It should have one common set of hardware that can be managed either way. I think also because Cisco does have, their one of the few that can serve data center, campus, Wi-Fi, certified, right? How does that all work together and create a better experience? And right now it kind of works in campus. You know, data center with Nexus is still separate. But that's where I think from a Cisco perspective or from a customer perspective, there's just one network that delivers applications and experiences to users. Too often it's sold in these separate silos. And I think that's where a lot of the complexity gets added it. What do you make of this as-a-service trend? You see APEX from Dell, GreenLake from HPE, both companies make a big push into as-a-service. It's interesting 'cause Cisco's got a bigger ARR business. It also has a much bigger software business. Almost 30% of Cisco's revenue comes from software, so it's got significantly better margins than those two other companies. But what about as-a-service? You don't hear as much talk. Is that because they've got plenty of subscription, plenty of ARR, is it just not as applicable in networking? Well, they don't have the big services arm that certainly that HP has, right? Or Dell. >> Or Dell, yeah. Where they make a lot of money off that. Cisco will push almost all of that to their partners, and that's up to their partners to be able to sell it that way. I do think from a Cisco perspective, they have been pushing subscription more, and I think that does a couple of things for customers. First of all, it does spread the cost, right? 'Cause if you think of historical network spend, you'd spend a whole bunch of money year zero, then nothing year two, three, four, five. And then, you need to- >> Refresh. Refresh, and then there's a big bucket of spend, so it flattens it out. But also it allows the customers to stay current and modern. And there's a lot of old equipment out there and customers aren't getting the benefit of the newer features in there, right? So it's a little bit like with your mobile phone, you pay a monthly fee. And then, when the new iPhone comes out, you don't think twice about it. You just get the new one, because you're paying that monthly fee. Right, if you all of a sudden had to shell out $1,000, you might go, "Eh, I don't know if I want to do that. I might wait a year," and that's historically what Cisco customers have done. But the new Cisco equipment's loaded with AI capabilities, with advanced security capabilities. I think you could argue that, you know, if you buy the Cat 9Ks, you're going to have a more secure, more agile network than if you have running Cat 6Ks or even 5Ks, which still is a big install base of that. And I think that's one of the big reasons to go down that software route for Cisco, is to make sure that they keep a steady refresh going. And, frankly, I think it's better for customers as well, because it does flatten the spend out. It sounds like a better model. They didn't have to necessarily, you know, in HP's case, pivot the entire company toward as-a-service, or Dell competing with HPE, you know, making a big push on APEX, and Cisco sort of just has it as sort of an integrated part of their business. Yeah, but I think for HP and Dell, that's become their business. Well, it has for HPE. >> Yeah, yeah. Well, at least from a marketing standpoint, Dell's a little bit more balanced, right? Yeah, where Cisco, I think it's an option for customers. And understand Cisco's customer base is massive, right? They have governments and really everything, and there's certain verticals that probably won't ever buy that way, right? They want to capitalize the spend, they want to buy it upfront, and then they're going to run that equipment for as long as they can. And so I don't think Cisco can holistically pivot that way. It's about giving customers options and, you know, there's an option to buy any way you want. All right, let's pivot and take a look at the all important security sector. Security's run by Jeetu Patel, who also runs collab, which is interesting. They just brought in Tom Gillis recently. That was a great hire. >> It was a great hire. He's an excellent leader, knows his stuff. I always admired his work at VMware, and I think that's a awesome pickup. Here we show the incredibly crowded security market, same dimensions, Net Score on the Y. There's a lot of vendors on there. Pervasion on the X, right. Microsoft, you see in the upper right there, will skew all the data. But you can see Cisco has a major presence, as does Palo Alto and Splunk. All credible on the vertical axis. But they're below the 40% line, but that's expected for such large companies. And that squiggly line represents Cisco's path over the past 10 quarters. So the company's very strong in security. It doesn't have the spending velocity of the pure plays, like CrowdStrike and Okta, Zscaler, CyberArk, SailPoint, or even CloudFlare, but it's very respectable. Cisco also just purchased Armorblox, which uses AI to secure emails and reduce other risks. I feel like Cisco needs a security supercloud. They want to create an experience across, whether it's on-prem, the three clouds or four clouds, if you include Alibaba at some point, and then out to the edge, like a consistent experience. Is that in the cards? Is that the right way to think about where the direction of the industry generally, and Cisco specifically, should be going? Yeah, it's interesting that data shows that, because they only grew 2%, right? Well, go back to the slide, because you can see that they're down on the vertical axis, right? So that's the spending momentum. But what they are doing is they're sort of growing their share, you know, as they, because remember this is not necessarily spending dollars, it's- >> Customers. Customers, right? You know, they're probably picking up some cohorts. I don't know, that's sort of an interesting, you know, dynamic. In some ways Cisco has been successful in security almost in spite of itself. They do have some really good products. Like I said, Kenna, Talos, Umbrella, Duo, AnyConnect, they're all really good security products. What they haven't really done is create a Cisco security story. The fact that we still reference them as separate products, I think is an issue. And I don't know when Cisco went down this path, years ago when Cisco were to acquire a company, they would almost eradicate that brand name almost immediately, and they would do it because they wanted to know Cisco was the brand. You talked to Talos customers today, some of them don't even know that Cisco owns that company, right? And so, you know, the same with Duo and things like that. They're very good products. So I believe, and we talked about this at the Palo event, that security is moving to platform. I think breadth of product matters, because security is shifting away from signature based to AI and analytic based, right?

And so if you are breached, you have to know where that breach came from, and so can you trace it all the way back? And Cisco's share in network gives them, should give them a disproportionate advantage in security, 'cause they can see things frankly that nobody else can, they just haven't really tied all the things together. Like I said, XDR announced at RSA was a good first step, but there's a lot more work to do there, and I'm hoping at Cisco Live we see more of that. And Palo Alto seems to be ahead in that, at least on that consolidation play. Would you agree? >> Yeah, I do. In fact, it's interesting, 'cause I think Palo almost, they market ahead of their capabilities, which, yeah, I'm okay with that. But they have done a nice job of acquiring companies, rolling them in and then having everything fall under the Cortex brand, you know, as part of their overall XDR, XSOAR, you know, those type of products. And Palo has done probably a better job than anybody with that. And part of that's vision. "Hey, we're going to lay out a vision." And as long as they deliver on it eventually, maybe faster than maybe Microsoft has to deliver on it, but yeah, that's okay. I feel like Cisco is, "Well, we have that too." You know, "We've got all the above and pick what you want." So that's a challenge. That's why I call it the supercloud, the security supercloud. They got to bring that together. I will say that it's interesting 'cause I asked Nikesh about this at their event. Like, "Why do you have to say your best of breed when you've got this big platform?" And he threw it back at the analyst industry. He goes, "You look at Gartner and they got an MQ for this, and an MQ for this, and an MQ for this, so if we're not best of breed, then we don't show up on those magic quadrants." But there really isn't a magic quadrant for security platforms. And, you know, shame on Gartner for that, I think. But, you know, from a commercial perspective, you know, they'd rather sell 10 magic quadrants than one, right? Right, yeah, of course. But, I do think from a customer perspective, you have to be able to tie those security products together. You have to be able to tie it together with network, because that gives you visibility you didn't have before. And I do think that the security leadership, and you mentioned Tom and Jeetu, actually, they understand that crystal clear and that is the mission that they're going down. It's hard to get there overnight though. All right, let's jump to observability. It's sort of the confluence of log analytics and application performance management, monitoring, et cetera. And Cisco has a major stake in this business, which we're going to talk about. But before we do, I want to take a look at what one customer said in an ETR round table about this topic. This is ahead of engineering, and this customer says, you know, he's talking about AppD shop sticking with AppD. And this person references the value of the ThousandEyes acquisition along with AppD and security, and the application centricity is an attractive dynamic. SecureX, which is Cisco's integrated security play, which admittedly, again, we just talked about, needs some integration. But, you know, basically in the second quote, this person says, "I can get all this in a single platform and that's super valuable to me if you're a Cisco shop." "If you're not," it's a, quote, "free game." Zeus, maybe this person means it's a free for all.

And this is where we get into the best of breed or the suite. Thoughts on sort of the value if you're that Cisco shop of that integrated play. And what if you're not, is it just this free for all mess? That should be an advantage for Cisco. It should be. And, in fact, I really, I love ThousandEyes and AppD. They've done a really nice job with ThousandEyes making sure that's integrated across a lot of different products. And when you think of how things have changed in the corporate world, Dave, a decade ago, we never used the internet as part of our corporate transport. Today, it's very common. We got people from home are doing SD-WAN. And so if you don't have visibility over the internet, you really don't understand how things are performing, and ThousandEyes is better at internet visibility than anybody out there. Now, AppD on the other hand, I think has been maybe the biggest wasted opportunity for Cisco since they've acquired. I really expected AppDynamics to become the tip of the arrow sale for Cisco, right? So if you want to sell business outcomes, then AppD shows you what's happening at the application layer.

You can then use that to be able to make decisions on, you know, "Should I upgrade my Wi-Fi, should I upgrade, you know, the campus network?" Well, AppD can tell you, you can model out the impact that it's going to have from a business application perspective. And I think they're finally starting to understand how to use that. I think having a lot of the emerging tech roll up under Liz Centoni, you know, I think that's helped with that. And at Cisco Live EMEA, they rolled out this thing called Business Risk Observability, which is exactly what I'm talking about. So you can take a look at all your threat data, and then map it to your application environment, and it helps you prioritize, "If I do this, it's going to have this kind of impact. If I do this, it's going to have this kind of impact," right? And so now what AppD lets you do is rank all your network and security initiatives by business value, right?

And that's, ultimately, it creates a much easier sales model. Like, you can go to the head of sales and go, "Hey, you know, you can improve sales performance by X percent if you upgrade this part of your network." That's much better than going in, "Well, Wi-Fi's a little old, you should upgrade to, you know, Wi-Fi 6, right? So it takes it away from bits and bytes and moves it to business metrics, and AppD does an excellent job of that. And that's why I would like to see AppD become their lead sales tool for the company cross portfolio. Well, it's interesting, let's take a look at the data and it'll confirm what you just said. Cisco doesn't have a full stack, oh, sorry, ETR rather, doesn't have a full stack observability category. But through this next view, we're able to bring in various companies that are sort of hovering around the space and look at their relative position. So again, similar chart here, Net Score against pervasiveness in the data. And we've plotted Splunk, Datadog, through Elastic, you know, Grafana, they're sort of hovering around as an adjacency, Dynatrace, New Relic, which just failed to actually secure private equity. And you can see AppD, which you know, Cisco bought in 2017 for around 4 billion, just under 4 billion. And introduced Intersight shortly thereafter as a sort of visualization and orchestration tool. But there were still holes in the portfolio as the market moved to full stack observability.

So Cisco bought ThousandEyes during Covid, in 2020, I think it was, for around a billion dollars. And then, it sort of strung 'em all together. But, Zeus, I feel like this story's not over. Cisco, as you pointed out, has an opportunity to really take these pieces, integrate 'em across the portfolio in potentially a game changing way, at least in the manner that the one customer described earlier with, you know, "I'm a Cisco shop, this is a big advantage to me." What's your take on what Cisco has to do to really dominate the market and take that next step? Well, I think deliver on the vision of full stack observability. You can say full stack observability, but are they really full stack? 'Cause right now there is a, I think if there were a magic quadrant for single panes of glass, they would dominate that, right? So they have a single pane of glass for everything. Now with that being said, in fairness to Cisco, they are doing a better job, right? They have Intersight-AppD interoperability, ThousandEyes-AppD interoperability. But they also have, you know, the Meraki dashboard is another single pane of glass. They have DNA Spaces, which is their network visibility tool. Webex has their own level of visibility as well. So six single panes. >> Yeah. Well, there's more, I think cross company there's probably 20 of them or something like that. And so you should have one dashboard to look at things through. I think that's the lens of AppD, and then be able to drill down from there. Understand you can't completely get rid of the other ones from an operational perspective, they're still necessary, but you should have one, you know, one pane of glass to rule them all, right? And be able to drill down from there, and it's different views for different folks. But they have all the piece parts, it's putting them together now. Yeah, all right, Zeus just published what I would call a know before you go post on SiliconANGLE. It's going to be in the show notes outlining his thoughts on what to expect at Cisco Live. So let's review that and what we'll be looking for next week. I wonder, Zeus, how Cisco's going to handle AI. You know, you run the risk these days of AI washing, but if you bury the AI lead, you look like you're not relevant. It's my view, Cisco, at the very least, has to use AI to make Cisco run better through automation and better infrastructure management. What are your views in terms of what Cisco's AI play is across the portfolio? Yeah, I don't think they're going to hit us over the head with AI like you would expect that an Nvidia event or an IBM event that's got Watson, where everything's AI. I think, for Cisco, AI is a tool. And I don't expect Cisco to come up with, well, they might come up with a ChatGPT-like interface for some of their management, but it winds up being a tool to run things operationally better. I think AI it's interesting that we are making such a big deal about AI today, but AI has been part of Cisco's portfolio for a long time, right? When they rolled out intent-based networking, AI was really the thing that actually made that work. They have a product called Encrypted Traffic Analytics that by its name you can actually find malware in encrypted traffic, and it does that using AI to understand traffic patterns and things. Their collaboration portfolio is loaded with AI.

So AI has been a tool for Cisco for a long time. I expect it to be, I think during the keynotes they'll be a little more overt about it because of the hype around it. But I expect it to remain, you know, a part of the overall tool set Cisco uses to build their products. But I don't think we're going to think of Cisco, you know, as an AI company, like an Nvidia or something like that. But I do think, and it's interesting to theorize how they could use a ChatGPT-like interface for users to use Webex to be able to find information or for network operations to say, "Show me the 10 areas of my network that need to be upgraded first," things like that. So that, again, but that winds up being an operational tool more so than a product that you would sell. If you know what I mean? >> Yeah, it makes sense. And that actually helps simplify the portfolio for its customers. >> Yes.

It makes it more usable, right? And natural language, you don't have to be a CLI monkey or jockey to be able to actually, you know, use the tools and things like that. You know, I used to do that actually more as an analyst, I could CLI with the best of them, but there's a big learning curve for that, right? And then, you're always relying on your top-level engineers. If you can simplify that, make a natural language, you actually take a lot of the stress off the high-level engineers, let them go do their strategic work, and be able to push stuff down to, you know, tier one, tier two support. That makes sense. Okay, next we think the security mandate has got to be to integrate Cisco's vast portfolio across on-prem, all major clouds, and out to the edge. Palo Alto, as we talked about, has a leg up on consolidation, but Cisco is such a major presence that it can do very well in this area. Coming from its network position of strength, Zeus, what does Cisco have to do in security? What do you want to see this week at Cisco Live? Yeah, first of all, I think the reason security is important is, because it's the biggest needle-moving market that they're in. And what I mean by that is, you know, are they likely to gain a ton of share in networking? Probably not because they're so big there, right? And so security, they're a single-digit player in a market that I think IDC projects to the 75 billion. So they're 2 billion in revenue, I mean, that's low single digits, right? So if they could even get the 10%, that would add a huge amount of revenue to Cisco. And their goal should be to have their security share match their network share. I think that the long-term vision would be having that Cisco network and Cisco security all work together, and so they're able to see things and identify risks and fix them faster than anybody.

Now we're not going to see that at Cisco Live 2023, because that's a long-term journey. I think what I'm hopeful to see is some more of their cloud products brought together, right? If you think about the way a home worker might use, there's a lot of heavy lifting. In fact, the security industry's done a terrible job of this. We often make the user the integration point. You know, VPN when you want to use this application, and, you know, use the secure web version when you want to use this application. Why does the user got to figure that stuff out? Yeah, you're right. >> Yeah, you know? And 'cause the tools are there, and I think from a Cisco perspective, if they can bring some of those cloud products together and be able to deliver them in a single SSE type of offering, that would be a win for Cisco at this event. But I think laying out some vision with what they want to do with security, and then show more product roadmap on the way to doing that. Like I said, XDR was step one. Now let's see more of step two, three, and four, with the vision of where this goes, you know, ultimately. You're right, it's a big if/then, isn't it? You know, if this is a legacy app and it's running over IP, then okay, you got to make sure there's a VPN. If it's in the cloud, there's no, it's just in the cloud. It's a service, right? >> Yeah. But then you leave it up to the user to figure out how I should use these things. And I've always said, if you make the user the integration point for technology, it's not going to work, 'cause the user's going to pick the path of least resistance or they're just not going to do it, right? And, like I said, the old way of like making sure the user's aware to download my, you know, the right signatures and, "Ah, it's too much heavy lifting." This stuff has to be almost invisible to the user. Yeah, Cisco engineering- But Cisco's got the opportunity to make that invisible to you. They have a better opportunity than anybody, because they own the network and they can embed a lot of that stuff in network. Yeah, and they've got a lot of, you know, legacy infrastructure as well. All right, the core networking's always going to be forefront of Cisco Live, and, you know, to keep coming back to the supercloud concept, a singular experience, a true single pane of glass, if you will, across all clouds in a cloud-native fashion. Can Cisco, in your view, sort of bridge the world of legacy apps and infrastructure with cloud native? Are they in a position, you know, to do that? Yeah, I don't think Cisco's going to become a cloud like an AWS, right? But what Cisco has the opportunity to do is be that abstraction layer that actually makes supercloud real. So the division of supercloud is, as a customer, I'm no longer tied into what's the joke, right? It's all the clouds are like "Hotel California," you can check out, but you can't leave, right? And so how do I actually create this one logical cloud where it spans multiple cloud providers, edge locations, private data centers? And it's not going to be the cloud providers that enable that, because Azure tools don't work in AWS, and their tools don't work in GCP, right? So Cisco from a network transport, from a security perspective, from an optimization perspective, can actually act as that abstraction layer that sits above the cloud layer and allows those things to move around the clouds.

And because of they're presence, because they work with the cloud providers, because they work with the telcos, because they have tools like ThousandEyes and AppD, could actually become that bridge between the physical clouds and create that logical supercloud. And so I think a lot of that starts with networking. and I think they have a great opportunity there. At this show though, I think I'd want to see more progress of what they started with Meraki-Catalyst integration. They still have Talos as a separate product, you know, Wi-Fi, different versions of Wi-Fi, so let's see if they can move the needle in creating one Cisco networking story versus what they have today, which is really two or three. Yeah, that's a sort of logical step in the progression. All right, let's talk about collaboration. I mean, that entire industry went from rocket ship during the pandemic, and then rapid deceleration. But, as you said, Cisco sort of underperformed the pure plays, and then it definitely is feeling, you know, the pinch from the current situation. But hybrid, you know, it's a hybrid world. That's not going away, and that brings real challenges. Is this a game of integrating with your security portfolio to reduce risks or, you know, simplifying user experience? What's the play here for collaboration in your view? Well, if you asked Jeetu, it's about making Webex 10x better than any other application out there. And it's not today, it's getting there. I think the bigger challenge for Cisco though is Microsoft Teams. Teams is interesting because of all the collaboration vendors out there, if you ask users, it has probably the poorest experience. RingCentral, Zoom, even Avaya, they all have better experiences than Teams. But Teams is a license play. If I'm an E5 customer or an E3 customer, I get a certain level of Teams for free, and then, I can add that in. Even though, I was talking with Irwin Lazar from Nemertes about this, the research they've done, it's Team's actually the most expensive. It's the most expensive free thing you'll ever deploy. Free like a puppy. >> But because it's death by a thousand cuts, you start free, then you have to add voice, it costs you a little bit more. You want to security, it adds a little bit more. And I think what Cisco's done is they've accepted the fact that Team's going to be in there. From the device perspective, now Cisco devices run on Microsoft Teams. You can run Microsoft Teams natively. They've gotten Microsoft's thumbs up and they're supporting it as well, and so they can coexist with them. I think what Cisco needs to do is understand that the world isn't going to be all Teams, most companies are going to keep more than one collaboration vendor in there. And Webex is loaded with features, you know, Slido from a polling perspective, and they've got the ability to do async video, and their webinar product and hybrid-event platform is better than anybody's.

And so if I can take that to certain departments and, you know, using Webex to create a better experience than what you might do with Teams, I think that's their goal, is to be able to bring it in departmentally, and then backdoor it. I would actually like to see Cisco, even with the Webex console, do to Microsoft what so many vendors have done to them. When Aruba came around, they didn't try and sell Wi-Fi right away. They just tried to sell Wi-Fi management. They could say, "We'll manage your Cisco network better than Cisco will." And then, they would backdoor their sale in. The Cisco, you know, Webex portal and control panels are very good and they should be managing everybody's, whether it's Team, Zoom, Ring, whoever, let's just manage it, and then we'll eventually bring 'em up. But Teams has certainly been a force in the industry that's been hard to compete with because of licensing. Yeah, Microsoft makes it easy, and then they're everywhere. >> Yeah. All right, Cisco we think has an opportunity to make some moves in full stack observability, but the linchpin, as, Zeus, you wrote on SiliconANGLE, is the application-centric view of the world. Explain what you meant by that in the context of observability. Yeah, well, I think it was what I was talking about, is being able to prioritize network upgrades, security upgrades, and deployment of Cisco stuff within the context of what it means to an application, right? And AppD is an excellent tool. It allows you to look at, you know, something like a mortgage processing service, break it down by all the different steps, find out what's weak, what's working, what's not, and then say, "Well, if we upgraded this part of the infrastructure, it would have this kind of an impact." Because I think too often companies get into these situations where they don't really know what the ROI of a network upgrade is or of a security upgrade. They just know it's gotten kind of old and things aren't quite working. But if I can now tie that to application performance, then I can actually turn it into business metrics, right?

And I think AppD does that. And I mentioned business risk observability, which does that from a security perspective. They should be able to do that from networking. They should be able to do that even with collab, right? I think AppD gives them a view into the performance of apps that no other infrastructure vendor actually has. All right, finally, he wrote, if you've never been to a Cisco Live where Chuck Robbins hasn't done his part to address ESG, you know, what should we expect? I mean, I feel like all the large companies really are taking this seriously. They put somebody in charge. It's not just lip service. Customers are now demanding it, right? Yeah, and I think, you know, Cisco, there's two sides to this, right? There's the Cisco corporate in which, you know, Chuck and team has stood up onstage and said, "We're going to positively, impact a million lives," or a billion lives, "by 2025," I think it is, and they're well on the way there, and they do that through a bunch of different programs. They're part of the Global Citizen Group, they have contests, and they give out money to entrepreneurs that are trying to change the world. But then there's what it means to their customers, right? And Cisco equipment is actually loaded with capabilities today that actually help with sustainability. And so they have a feature called EnergyWise, in which the network, if not being used, will shut itself off. And then, if you walk into an area, the access points and that part of the network will turn themselves back on, right?

Cisco spins its own ASICs and so they can optimize network, the silicon for that specific function, and so it's a lot more lower power consumption. You can do things with PoE, right? And so I think Cisco actually can help their customers achieve their sustainability goals by understanding all the features and functions that are in that. And I think you will see more of that this year. I know at Cisco Live EMEA back in February, there was a whole sustainability zone in which you go in and take a look at all those features, and I'd expect to see that replicated here. All right, cool, we didn't talk much about edge, but it's in there, you know, we're sure we're going to hear a ton there. So theCUBE is there. I just got the notification where we're going to be, we're at the expo floor, that's great, at Cisco Live, across from the NetVet Lounge, which is Booth 1427. We got a small space. We're doing the pop-up cube next week. You're coming on I think on Tuesday, right? I believe that's correct. >> Tuesday, yeah. Well, thanks for coming in today. Oh, no, thank you. >> Always great to have you sharing your perspectives on Cisco and a lot of other companies. So we'll see you next week out in Vegas. All right. >> All right, cool. Okay, many thanks to Alex Myerson, who's on production and manages the podcast, Ken Shifman, as well. Kristen Martin and Cheryl Knight helped get the word out on social media and in our newsletters. And Rob Hof is our editor-in-chief over at siliconangle.com. Remember, all these episodes are available as podcasts. Wherever you listen, just search "Breaking Analysis" podcast. Appreciate if you subscribe. I publish each week on wikibon.com and siliconangle.com. And you can email me if you want to pitch me, david.vellante@siliconangle.com or DM me at dvellante, or hit me up on our LinkedIn posts. I'll respond if you got a great pitch and it interests me. If not, don't take offense, we get, you know, hundreds a week of inbounds. Also, check out etr.ai for the best survey data in the enterprise tech business. ZK Research, another great resource, check that out. This is Dave Vellante, for Zeus Kerravala and theCUBE Insights powered by ETR. Thanks for watching, everybody, and we'll see you next time on "Breaking Analysis." (gentle music)