Tag Archives: Cisco

Cisco MDS 9700 switches prep for 64G Fibre Channel NVMe-oF

Gearing up for adoption of non-volatile memory over fabrics, Cisco upgraded its multilayer MDs network switches to help shops transition to the next generation of Fibre Channel block storage.

Cisco will add line cards for the Cisco MDS 9700 family for in-place hardware upgrades and an extension of Cisco SAN Analytics to support the NVMe protocol.

The new Cisco MDS 9700 switching hardware enables data centers to run multiple Fibre Channel (FC) generations in the same chassis. Other new features include Ansible modules that automate deployment of storage tasks for VMware vSAN, device aliases and zoning.

Cisco said it plans to ship 64G line cards for MDS-9706, MDS-9710 and MDS-9718 Director switches by the end of 2019. The new cards are timed in advance of 64 gigabit per second FC, also known as Gen 7 FC. A data center can install the Cisco line card to run 64 Gbps FC concurrently with existing 16-gig and 32-gig traffic.

MDS 9700 switches are part of the Cisco MDS 9000 product line, which consists of large networking devices that centralize the management of storage traffic at the switch level. Cisco MDS 9700 products launched in 2013, around the time NVMe flash media emerged as a contender to SATA-based SSDs.

Cisco follows Brocade

The latest Cisco MDS product update comes nearly 18 months after similar products hit the market by SAN switching rival Brocade, now part of semiconductor giant Broadcom. Broadcom and Cisco are the only large vendors who sell FC network switches and are positioning those devices for NVMe over FC implementations. There are also Ethernet and InfiniBand options for running NVMe over Fabrics (NVMe-oF).

FC technology delivers a high level of lossless performance, while NVMe offers a quantum boost in network latency by routing traffic across PCI Express lanes. The combination is expected to have broad appeal to data centers with applications demanding extreme high performance.

Reengineering the Cisco MDS 9700 required a lot of work to avoid “rip and replace” scenarios, said Scott Sinclair, an analyst for storage at Enterprise Strategy Group, an IT research firm in Milford, Mass.

“There is a big desire to transition storage networks to NVMe, and the Fibre Channel community is making it insanely easy to do. Cisco had to do a lot of hard work to make this transition seamless, and that will help companies save a ton of money over the long haul,” Sinclair said.

Data centers can adapt existing FC technologies for NVMe via a software upgrade. FC has fewer hurdles to NVMe adoption than Ethernet-based remote direct memory access memory technologies, which include RDMA over Converged Ethernet and Internet Wide Area RDMA Protocol. Another NVME fabric option is TCP/IP, a server-native functionality popular with hyper-scale cloud providers.

Enhanced troubleshooting

Onboard telemetry is native to all Cisco MDS 9000 switches. The latest iteration of the software is designed to capture high-fidelity reads of all traffic, including traditional SCSI block messages and data sent via NVMe-oF. The tool allows admins to slide back one hour at a time to pinpoint trouble spots with networks or storage.

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Cisco adds UC headset management to IT console

Cisco has added headset management and analytics tools to the IT dashboard of its flagship on-premises telephony product. The move is part of a campaign to penetrate a corner of the unified communications market Cisco had previously ceded to hardware partners.

Cisco for years relied exclusively on vendors such as Poly (formerly Plantronics) and Jabra to provide customers with headsets for its desk phones and UC apps. In March 2018, Cisco released its headsets in an attempt to capture a slice of a market that Frost & Sullivan expects to exceed $2 billion by 2024.

The new UC headset management tools are a crucial part of Cisco’s sales pitch. Unlike competitors that specialize only in endpoints, Cisco also makes the telecommunications products that its headsets are used with, allowing Cisco to include a more comprehensive set of analytics and management tools in a single dashboard.

A recent update to Cisco Unified Communications Manager (CUCM), an on-premises and hosted IP-based telephony system, added headset management capabilities to the same dashboard that IT administrators already use to troubleshoot call quality issues and other Cisco phones.

IT administrators can use the console to update the firmware of Cisco headsets or alter settings for volume, audio bandwidth and wireless range. Admins can perform the tasks for individuals or groups of employees all at once. The dashboard also provides an inventory of headsets that includes non-Cisco devices.

The tools are not revolutionary. Most major hardware vendors have developed software for managing endpoints that provide a similar level of control. Businesses are coming to expect these types of consoles as they buy headsets in increasing numbers.

The latest tools are available now in CUCM version 12.5(1)SU1. Later this year, businesses still using version 11.5(1)SU7 will be able to access them without updating to the latest edition of CUCM.

Cisco’s new headset management technology is only for CUCM. The company has yet to bring the same features to the IT dashboard of Webex, a cloud-based calling, messaging and meetings app.

Cisco offers four lines of headsets for office and contact center workers, a mix of wired and DECT wireless devices. The vendor is planning to release Bluetooth-enabled headsets in the coming months.

Cisco is not the only new entrant in the headset market. Longtime UC rival Avaya released a line of headsets in early 2019 as part of a broader campaign to boost hardware sales. Around the same time, Avaya launched its first open-SIP phones, which work with the communications platform of any vendor.

Professional headset revenues were projected to increase at an average annual rate of 8% between 2017 and 2024, according to Frost & Sullivan. The increased demand stems in part from the growing popularity of cloud UC and softphones, which let users place and receive calls through their computer.

“Cisco’s newly introduced headset management tools follow the moves of the leading professional headset vendors in the space,” said Alaa Sayeed, analyst at Frost & Sullivan. “It is surely a positive step forward from a company that is visibly investing in the pro headset arena as part of its broad enterprise endpoints portfolio.”

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Cisco security flaw leads to $8.6M payout in whistleblower case

Cisco agreed to pay $8.6 million to settle a whistleblower lawsuit that accused the company of selling video surveillance software to government agencies despite knowing for years that the product suffered from critical security vulnerabilities. The settlement was the first of its kind against a tech company for alleged cybersecurity fraud.

Hackers could have used the Cisco security flaw to gain access to a customer’s local area network, potentially giving them control over physical security systems such as locks and alarms. The hackers also could have exploited the weakness to view, modify and delete video surveillance feeds and to obtain user passwords that would mask their activities.

Federal agencies that used the flawed product to manage video surveillance feeds included the Department of Defense, the Secret Service, the Department of Homeland Security, NASA and the Federal Emergency Management Agency, according to court documents unsealed Wednesday. Major airports, police departments and public transit systems had also deployed the product.

Cisco became aware of flaws in the product, called the Cisco Video Surveillance Manager, no later than May 2008 but did not issue a security advisory until July 2013, according to Cisco’s settlement agreement with 15 states and the District of Columbia. Offices of the state attorneys general provided a copy of the deal.

Cisco did not admit wrongdoing.

Cisco has made security a main selling point of its cloud products in recent years. This week’s revelations risk sullying that reputation at a time when consumers and businesses are becoming leerier of the threats posed by new technologies. The case underscores that vendors need more than just secure software — they need well-enforced protocols for responding to reported defects. 

In a blog post, Cisco said the settlement showed that software companies were increasingly being held to a higher standard on security. “In short, what seemed reasonable at one point no longer meets the needs of our stakeholders today,” said Mark Chandler, Cisco’s executive vice president and chief legal officer.

Whistleblower’s lawsuit

James Glenn, a former employee of Denmark-based Cisco partner NetDesign, sued Cisco in May 2011 on behalf of the federal government and numerous state governments who had purchased the product. Glenn acted as a whistleblower under the provisions of federal and state fraud laws that allow private citizens to file lawsuits on behalf of governments.

James GlennJames Glenn

Glenn alerted Cisco to the vulnerabilities in October 2008. In March 2009, while attempting to get Cisco to patch the flaws, Glenn’s position with NetDesign was terminated because of “economic concerns,” according to the lawsuit. NetDesign did not respond to a request for comment.

Glenn first alerted federal authorities to the security issue in September 2010, asking a family member to tell the FBI that the Los Angeles International Airport was using the software. Glenn later spoke to a detective for the airport who served on the FBI’s Joint Terrorism Task Force.

The settlement marks the first instance of a citizen-initiated whistleblower lawsuit prompting the U.S. government to successfully seek a financial penalty against a tech company for cybersecurity fraud, according to Constantine Cannon LLP, a law firm that represented Glenn.

As part of the $8.6 million settlement, Cisco will pay Glenn $1.6 million. Separately, Glenn is asking a federal judge to order Cisco to reimburse him for attorneys’ fees and other costs related to bringing the action. Nevertheless, the penalty is a tiny drop in the bucket for Cisco, which brought in $49.3 billion in revenue last fiscal year.  

The settlement — representing a partial refund for those who bought the product — covers only the government agencies involved, meaning Cisco could still be subject to lawsuits by private companies that used the software, which the vendor sold between 2008 and 2014.

“My view is that there are likely international governments, as well as domestic and international private companies, who could be impacted here for sure,” said Mary Inman, an attorney for Constantine Cannon LLP’s whistleblower practice group. “I would expect to see follow-on lawsuits from class-action attorneys representing some of the private customers here.”

Cisco’s handling of the security flaw

Cisco inherited the technology behind the product through its 2007 acquisition of Broadware. Cisco released a best practices guide in 2009 that the company claims addressed the security vulnerabilities in question. However, in an interview Thursday, Glenn disputed the guide’s helpfulness. “I didn’t see a version of the guide that would have been effective in mitigating those issues,” he said.

Cisco released an advisory in July 2013, shortly after a security website posted publicly about the vulnerabilities. The company released a software update in December 2012 that eliminated the flaws, but customers were not forced to upgrade. Cisco continued to sell vulnerable versions of the product until September 2014. 

The lawsuit accused Cisco of violating the federal False Claims Act by knowingly selling a product that failed to comply with security standards for government computer systems. The company also allegedly failed to warn customers subscribed to its premium security service about the flaws.

“We’re increasingly seeing whistleblowers from around the world alerting the U.S. authorities to fraud,” Inman said. “[This is] the first of what we believe will be … many whistleblower-initiated lawsuits which are helping to hold the tech community accountable.”

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Cisco’s acquisition of Acacia bolsters service provider offerings

Cisco plans to acquire Acacia Communications for $2.6 billion, a move that would make Cisco a direct supplier of packet-optical transport systems for carrier networks and organizations that connect data centers across hundreds of miles.

Cisco announced the pending purchase on Tuesday in a joint statement with Acacia, based in Maynard, Mass. The companies expect to close the Cisco acquisition in the first half of next year.

Cisco offers Acacia’s packet-optical transport systems (P-OTS) with networking gear it sells today to carriers, cloud service providers and the largest enterprises. Cisco rivals Juniper Networks and Huawei are also Acacia customers, and analysts expect them to eventually turn to other P-OTS suppliers, such as Ciena, Inphi and Nokia.

“If I’m a Juniper or a Huawei, why would I buy from Cisco?” said Rajesh Ghai, an analyst at IDC.

Bill Gartner, general manager of Cisco's optical systems groupBill Gartner

Nevertheless, Acacia customers can expect from Cisco the same level of support that they receive today and equal access to products, said Bill Gartner, general manager of the vendor’s optical systems group.

“If we’re going to make this successful, we have to make sure that we’re providing the technology to third parties that they want to consume at the time they want to consume it and at the right performance and price point,” Gartner said. “I don’t think we could make this successful more broadly if we give Cisco preference on any of those parameters.”

Reasoning behind Cisco acquisition

Cisco has agreed to acquire Acacia because the company’s optical interconnect technology will let Cisco help customers design networks that can keep pace with the projected increase in data traffic. Cisco has predicted that annual global IP traffic will increase from 1.5 zettabytes in 2017 to 4.8 zettabytes by 2022. Contributors to the traffic surge include internet growth, video content delivery and emerging next-generation wireless technology to support more demanding business applications.

Today, Cisco’s proprietary optical transport technology ends in the data center, where analysts expect port speeds of 100 Gbps and 400 Gbps to become commonplace over the next couple of years. To meet that emerging demand, Cisco this year completed the $660 million acquisition of silicon photonics company Luxtera.

With Acacia, Cisco will also own the optical technology for service providers that need high-speed connections for metropolitan area networks or data centers as far as 1,500 miles apart.

“Our optics business today is primarily addressing what’s happening inside the data center — short-reach optics,” Gartner said during a conference call with financial analysts. “We don’t have a portfolio today that addresses what happens outside the data center for pluggables.”

Acacia’s portfolio includes pluggables, which are optical modular transceivers that vendors can sell as a plugin for a router or switch. The pluggable architecture, which is in its infancy, promises to simplify upgrading and repairing transceivers in networking gear.

John Burke, an analyst at Nemertes Research, based in Mokena, Ill., said Acacia could help Cisco “stay dominant in large data center markets long term,” while also providing some technical advantages over Arista, Juniper and Huawei.

“I suspect it will also give a boost to some smaller optical companies and trigger at least one more acquisition — perhaps by Arista,” Burke said.

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GPU-buffed servers advance Cisco’s AI agenda

Cisco Systems is the latest hardware vendor to offer gear tuned for AI and machine learning-based workloads.

Competition to support AI and machine workloads continues to heat up. Earlier this year archrivals Dell Technologies Inc., Hewlett Packard Enterprise and IBM rolled out servers designed to optimize performance of AI and machine learning workloads. Many smaller vendors are chasing this market as well.

“This is going to be a highly competitive field going forward with everyone having their own solution,” said Jean Bozman, vice president and principal analyst at Hurwitz & Associates. “IT organizations will have to figure out, with the help of third-party organizations, how to best take advantage of these new technologies.”

Cisco AI plan taps Nvidia GPUs

The Cisco UCS C480 ML M5 rack server, the company’s first tuned to run AI workloads, contains Nvidia Tesla V100 Tensor Core GPUs and NVLink to boost performance, and works with neural networks and large data sets to train computers to carry out complex tasks, according to the company. It works with Cisco Intersight, introduced last year, which allows IT professionals to automate policies and operations across their infrastructure from the cloud.

This Cisco AI server will ship sometime during this year’s fourth quarter. Cisco Services will offer technical support for a range of AI and machine learning capabilities.

Cisco intends to target several different industries with the new system. Financial services companies can use it to detect fraud and algorithmic trading, while healthcare companies can enlist it to deliver insights and diagnostics, improve medical image classification and speed drug discovery and research.

Server hardware makers place bets on AI

The market for AI and machine learning, particularly the former, represents a rich opportunity for systems vendors over the next year or two. Only 4% of CIOs said they have implemented AI projects, according to a Gartner study earlier this year. However, some 46% have blueprints in place to implement such projects, and many of them have kicked off pilot programs.

[AI and machine learning-based servers are] going to be a highly competitive field going forward with everyone having their own solution.
Jean Bozmanvice president and principal analyst, Hurwitz & Associates

AI and machine learning offers IT shops more efficient ways to address complex issues, but will significantly affect their underlying infrastructure and processes. Larger IT shops must heavily invest in training and the education of existing employees in how to use the technologies, the Gartner report stated. They also must upgrade existing infrastructure before they deploy production-ready AI and machine learning workloads. Enterprises will need to retool infrastructure to find ways to more efficiently handle data.

“All vendors will have the same story about data being your most valuable asset and how they can handle it efficiently,” Bozman said. “But to get at [the data] you first have to break down the data silos, label the data to get at it efficiently, and add data protection.”

Only after this prep work can IT shops take full advantage of AI-powered hardware-software tools.

“No matter how easy some of these vendors say it is to implement their integrated solutions, IT [shops] have more than a little homework to do to make it all work,” one industry analyst said. “Then you are ready to get the best results from any AI-based data analytics.”

Cisco ASR 9000 router gets usage-based pricing

Cisco has introduced pay-as-you-go pricing for the latest line card of the ASR 9000 router, offering service providers a more flexible licensing model as they evaluate 5G infrastructure suppliers.

Cisco’s new licensing model, unveiled this week, applies to the new line card and subsequent generations. The latest hardware has a maximum throughput of 3.2 Tbps, uses a half watt of power per gigabit and is available with 32, 16 or 8 ports of 100 GbE. The cards fit into existing ASR 9000 chassis.

The pricing change lets service providers buy a license for ASR 9000 capacity across sites, but only pay for what they use. The cost would increase as ports are activated, said Sumeet Arora, the head of engineering for service provider network systems at Cisco.

Previously, service providers had to buy an ASR 9000 license for each site based on expected demand. As a result, the customers would pay for capacity they weren’t using, Arora said.

The ASR 9000 router in 5G

Cisco is making its pricing more customer-friendly as service providers consider technology like the ASR 9000 to support future 5G business and consumer services. The fifth-generation cellular technology delivers speed, capacity and latency improvements that will enable new products for healthcare, manufacturing, entertainment and the auto industry, proponents have said.

However, analysts do not expect the 5G services market to take off for several years. Cisco CEO Chuck Robbins recently told financial analysts that he didn’t expect significant 5G sales until 2020.

ASR 9000
ASR 9000 router with 32 100 GbE ports

Until the 5G market opens, Cisco is aiming the new ASR 9000 line cards at the network edge where service providers deliver virtual private networks and other business services. Other “big use cases” include internet peering, data center interconnects and the IP infrastructure for mobile services, Arora said.

The ASR 9000 router competes with products from Juniper Networks, Huawei and Nokia. The latter two vendors, along with Ericsson, comprise the top three suppliers to service providers.

Last week, Juniper Networks announced a partnership with Ericsson to sell a collection of products for moving 5G traffic. Cisco announced a wide-ranging partnership with Ericsson in 2015, but that deal has stalled, and many analysts believe it is nearly dead.

“The Ericsson-Cisco partnership was a nonstarter, and both parties did not follow up on the promise that they had articulated during the announcement,” said Rajesh Ghai, an analyst at IDC.

Cisco adds LTE modem to Meraki MX security appliance

Cisco has introduced Meraki MX security appliances with a built-in 4G wireless broadband modem. The company also added the Long Term Evolution, or LTE, modem to a new Z-series teleworker gateway.

This week, Cisco launched the Meraki MX67C and MX68CW with an integrated CAT 6 LTE cellular modem. Also, Cisco unveiled four MX models – the MX67, MX68, MX67W and MX68W — without LTE but with more throughput than older models. All the new MX hardware, which are the first in the Meraki line to support the 802.11ac Wave 2 Wi-Fi standard, can deliver up to 450 Mbps of firewall throughput.

Network admins manage Cisco Meraki switches, appliances and access points through a web-based console called the Meraki Dashboard, which also provides automation and analytics. Cisco has aimed the product line at small branch offices and retailers that need a no-frills wireless LAN. For an access layer that meets the need of larger enterprises, Cisco offers the Aironet APs and Catalyst switches.

MX appliances are unified threat management devices with software-defined WAN functionality. A UTM system combines and integrates multiple security services and features, including a firewall.

Uses for LTE in the Meraki MX

The higher throughput in the latest MX appliances is aimed at companies accessing SaaS applications, such as Microsoft Office 365, said Imran Idrees, a marketing manager in Cisco’s Meraki unit. Remote branch offices can use the LTE modem as a substitute for broadband when it isn’t available.

Companies could also use the LTE connection as a failover link, Idrees said. If the Ethernet connection goes down, then the MX would switch to LTE.

“Given the ubiquity and increasing performance of LTE, this is a relatively inexpensive way for a branch office to increase its network availability,” said Mark Hung, an analyst at Gartner.

The cellular MX models have one Nano SIM card slot for connecting to a carrier’s LTE network. The built-in modem makes it possible track usage and performance of the MX from the Meraki Dashboard.

Getting LTE on older Meraki MX models required companies to plug a carrier-provided USB stick that contained the 4G modem. Because the modem wasn’t integrated with the MX, no data was captured for tracking performance.

With the latest models, data captured from the LTE connection includes signal strength, the provider’s name and how much data is traveling over the link. All the information is displayed on the Meraki Dashboard.

LTE in Meraki Dashboard

The Z3C gateway

The Z3C teleworker gateway is for workers who need a secure connection to the corporate network while they are on the road. “It’s a very compact device that a business person would take around with them,” Idrees said.

The previous version of the gateway, Z3, required a traveler to plug a hotel room’s Ethernet cable into the device to gain access to the corporate network. The Z3C has the option of connecting over LTE.

Companies that want to use a Meraki WLAN have to purchase the product line’s devices and a cloud subscription license. Once the license is registered, network managers can configure and manage the hardware through the Meraki Dashboard.

Cisco refused to participate in NSS Labs report on SD-WAN

Cisco refused to activate the Viptela software-defined WAN product NSS Labs bought for testing, leaving the research firm with a noticeable hole in its recent comparative report on SD-WAN vendors.

Cisco did not provide a reason for refusing to activate the product NSS Labs had purchased for between $30,000 and $40,000, NSS Labs CEO Vikram Phatak said this week. “There was no reason given other than, effectively, they didn’t want to be tested (for the NSS Labs report).”

Cisco’s action marked the first time a vendor had refused to turn on a product NSS Labs had bought for evaluation, Phatak said. Cisco’s Viptela team had initially told NSS Labs it would support the test, which led the firm to buy the product.

“That’s a first for us, candidly,” Phatak said. “And given Cisco’s ethical rules and so on — rules of conduct — I’m in shock because normally, they’re pretty straightforward to work with.”

Cisco refused to discuss the matter, saying in a statement “We believe our customer traction, standing in the market and the continued productive innovation we’re driving speak for themselves.”

NSS Labs wants a refund

NSS Labs wants Cisco to refund the money spent on Viptela. It is hoping it can get the money back without going to court.

“I hope it doesn’t come to that,” Phatak said. “We haven’t talked to any lawyers. I’m assuming that we’ll be able to have the conversation and get our money back.”

Typically, NSS Labs buys products, and the vendors turn them on like they would for any other customer.

“If someone says they don’t want to be tested, we say, ‘That’s great, but if a product is good enough to be sold to the public, it’s good enough to be tested,'” Phatak said. “We’re going to buy it, and we’ll report to the public.”

That’s a first for us, candidly. And given Cisco’s ethical rules and so on — rules of conduct — I’m in shock.
Vikram PhatakCEO, NSS Labs

NSS Labs noted Cisco’s refusal to activate the Viptela purchase in its SD-WAN Comparative Report, which was the company’s first SD-WAN test. Not having Cisco in the evaluation left out one of the largest SD-WAN vendors and a major tech company.

In the first quarter, London-based IHS Markit listed Cisco as No. 4 in the SD-WAN market, just behind Silver Peak. VMware was first with a 19% share, followed by Aryaka with 18%.

The NSS Labs report, released this month, compared the products of nine vendors, including VMware’s NSX SD-WAN, formerly VeloCloud. VMware is Cisco’s largest competitor.

NSS Labs had also planned to include Silver Peak in the comparison but noted it was unable to obtain the product in time for testing.

Tech companies often cite recommended ratings in NSS Labs reports in marketing materials. In April, Cisco highlighted in a blog post the organization’s “recommended” rating for the Cisco Advanced Malware Protection for Endpoints product.

Based on its recent SD-WAN tests, NSS Labs recommended products from VMware, Talari Networks and Fortinet and listed products from Citrix Systems, FatPipe Networks, Forcepoint and Versa Networks as “verified.” Tech buyers should consider recommended and verified products as candidates for purchase, according to NSS Labs.

The company issued “caution” ratings for Barracuda Networks and Cradlepoint, which means companies should not deploy their products without a comprehensive evaluation, NSS Labs said.

Cisco wants to help developers build Webex integrations

Cisco is encouraging developers to innovate on the web conferencing platform Webex Meetings as third-party integrations become an increasingly crucial differentiator in the market for collaboration software.

The vendor has added a new Webex Meetings page to its website for developers. The page includes tutorials, sample source codes and a full catalog of API reference documents. Those resources will help developers customize how their organization manages users and data through Webex.

Cisco also hosts a cloud-based “sandbox” where developers can design and test Webex integrations and offers one-on-one support to members of its developer program, Cisco DevNet. More than 500,000 developers have registered for the program, but many are focused on networking rather than collaboration.

Cisco is in the midst of an overhaul of its collaboration portfolio that includes the merging of its team collaboration app, formerly known as Cisco Spark, with the online meetings platform Cisco Webex, which has more than 135 million users.

Beyond rebranding the two platforms — as Webex Teams and Webex Meetings — Cisco also refreshed their user interfaces and combined them onto the same back-end infrastructure.

In addition to the revamped DevNet page, Cisco is also highlighting its Android SDK for Webex Teams, the product of a new partnership with Google. The tool will help developers add the messaging and meetings features of Webex Teams to Android devices.

Webex integrations increase business value of the platform

Vendors rely on an ecosystem of partners to improve their platforms by developing value-added integrations with other apps. For example, Google recently added several Webex integrations to Google Calendar, making it easier for G Suite users to schedule and join Webex meetings.

Integrations expand the possible use cases of a platform, making it more valuable to businesses, said Alan Lepofsky, a principal analyst at Constellation Research Inc., based in Cupertino, Calif.

“In the highly competitive collaboration market, vendors such as Microsoft, Google, Facebook, Cisco, Salesforce and Slack are all competing for developer mindshare,” Lepofsky said. “They try and entice partners to develop new features and third-party integrations by offering both financial and marketing incentives.”

In the team collaboration market, Slack has been particularly successful at curating an ecosystem of developers. Open APIs helped the startup challenge established vendors like Cisco and Microsoft and inspired many vendors to embrace a similar approach. (This week, Slack said it was valued at $7.1 billion, up from $5.1 billion less than one year ago.)

Even Microsoft has taken steps to open its historically closed system as it attempts to boost adoption of Microsoft Teams, the cloud-based successor to Skype for Business. This spring, for example, the vendor released a new line-of-business app store for Teams, where organizations can upload custom integrations.

Cisco has also given customers tools to customize their use of Webex Teams. But the app stores of both Microsoft and Cisco still trail Slack’s directory, which contains more than 1,500 prebuilt integrations with third-party business apps.

Cisco revenues up, customers warming to new products

Cisco has reported a 6% revenue increase in the quarter ended July 28, as the strong economy contributed to a boost in product sales and customer adoption of new software-driven technology.

Cisco reported on Wednesday its “highest quarterly revenue” of $12.8 billion and predicted a 5% to 7% increase in Cisco revenues year over year in the current quarter, which sent its stock up more than 6% in after-hours trading.

Cisco predicted adjusted net income for the quarter ending in October would range from 70 to 72 cents a share, beating analysts’ projection of 69 cents. Earnings of 70 cents per share for the July quarter beat analysts’ expectations by a penny a share.

The company reported “solid demand” for its products as it continued its transformation into a provider of network software and services from a company dependent on selling high-priced switching and routing hardware. Application sales rose 10% and recurring revenue, a reflection of sales in software subscriptions and services, accounted for 32% of total revenue, up a point from the same period last year.

During a conference call with analysts, Cisco CEO Chuck Robbins attributed the company’s strong quarter to a combination of customers buying more during a strong economy and execution by the Cisco’s sales and product development teams.

“I’m pragmatic to know it’s a combination of both,” Robbins said. “Clearly, the economy has been pretty consistent, and the markets have been positive, so that has certainly helped.”

Cisco revenues show new product sales

Nevertheless, Robbins was pleased with customer reaction to Cisco’s new products, notably the Catalyst 9000 campus switch and the Viptela software-defined WAN, which Cisco acquired last year for $610 million.

Clearly, the economy has been pretty consistent, and the markets have been positive, so that has certainly helped.
Chuck RobbinsCEO, Cisco

Introduced in June 2017, the Catalyst 9000 is the first switch Cisco has sold that requires the customer to buy a subscription to the software running on the hardware.

“I’m very pleased with how the adoption has been from our customers,” Robbins said. As of the end of the July quarter, Cisco had sold the Catalyst 9000 to more than 9,650 organizations.

“You’ll see us over the next coming quarters when we bring new products to market — particularly in the enterprise networking space, but across the portfolio — we will apply that same [software subscription] strategy,” Robbins said.

Viptela is vital in maintaining Cisco’s leading position as a campus networking supplier. The SD-WAN product routes traffic via software to and from campus networks and remote offices. Cisco has integrated the subscription-based Viptela with its Integrated Services Router (ISR) and plans to combine the software with other hardware.

“We’ve begun to see customers actually move forward with deployments,” Robbins said. “It’s early, but we like where we are, and we like what we see.”

Cisco revenues helped by service providers

Cisco also managed to increase sales by 6% to services providers, a customer segment that was down 4% in the previous quarter. Robbins attributed the growth to increased spending by some large customers rather than to purchases of new technology, such as products related to 5G, the next generation of wireless technology.

Robbins said carriers started discussing the infrastructure needs for 5G “in earnest” at Mobile World Congress in Barcelona in February. Nevertheless, he did not expect 5G-related sales to begin for at least a year, picking up in 2020.