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Products: Cisco Systems, Inc. (CSCO)

Infrastructure Platforms(Infrastructure Platforms)
Network Services(Network Services)
Applications(Applications)
Security and Other(Security and Other)

Infrastructure Platforms

What is being offered?

There are four key product areas in this segment

  1. Network Switches
    • A switch is a networking device that connects various network segments and directs and manages information flow between them.
    • Cisco offers the following two kinds of switches based on usage.
    • Bottom Layer Switches are the workhorse of most networks, they are the most common kinds of switches found in almost all networks. The have address layers 2-3 of network architecture.
    • Top Layer Switches are advanced switches used for server load balancing - directing and managing data flow to websites. They form Address layers 4-7 of network architecture.
  2. Routers
    • Cisco offers the following products based on their usage
    • Enterprise Routers - used primarily by medium to large enterprises for their own networking needs
    • Service Provider Routers (Core Routers) which are more advanced routers as they are designed to operate in the network backbone or core and usually interact with edge routers
    • Service Provider Routers (Edge Routers) which are placed at the edge of the network, they usually interact with core routers.
  3. Data Center
    • A part of Cisco's Unified Computing System (UCS) which combines integrated systems that include computing, networking and storage infrastructure functionalities with management and virtualization capabilities.
    • The architecture allows customers to optimize for traditional workloads, data analytics and cloud-based applications on a common operating environment.
    • Cisco Unified Computing System (UCS) products include Cisco Blade Servers, Cisco Rack Servers, Storage Optimized Rack Servers, Fabric Interconnects and corresponding Management Software.
    • Other products include Cisco HyperFlex Systems and Cisco ONE Enterprise Cloud Suite
  4. Wireless Products
    • Wireless Local Area Network (or WLAN) equipment includes equipment for indoor and outdoor wireless coverage for transmitting voice, video and data applications.
    • Equipment includes wireless access points, standalone technologies, controller-based & switch-converged technologies and cloud-managed technologies; and network managed services.
    • Product lines include Cisco Aironet Access Points, WLAN Controllers, CMX Cloud-App Based Platforms and Cloud Managed Access Points.

Who is buying?

Medium to large enterprises and service providers, globally - Cisco also offers similar products for small businesses and for retail consumers, but under the Linksys brand name.

Competitors

  1. Primary competitors - HPE, Juniper Networks, Huawei and Arista, Alcatel-Lucent
  2. Cisco Aironet - Aruba, Motorola,
  3. Cisco Hyperflex - EMC's VxRail, VCE, Nutanix
  4. Cisco Blade & Rack Servers - HP, IBM

What do customers care about?

  1. Processing speed of the switch
  2. Reliability of service (switches are supposed to work round-the-clock without fail)
  3. Software compatibility with the existing network
  4. Good customer service support
  5. Pricing.

Cisco's Top Selling Points

  1. Best-in-class products - Cisco's switches are generally recognized as the industry standard
  2. Wide range of products - customers can build entire networks by using Cisco products
  3. Wide scale and reach - ability to provide customer service to geographically diverse locations.

Infrastructure Platforms Revenues

This includes revenues generated from Cisco's core product areas including Switches, Routers, Enterprise Wireless Local Area Network (WLAN) communication equipment and Data Center Products.Cisco used to report separate revenues for these segments before FY'16. It now reports combined revenues for this segment. The total addressable market for all these segments combined is in the $50 billion range.

Cisco' Infrastructure Platforms Revenues increased from $26.6 billion in FY'14 to $27.8 billion in FY'17 as Cisco comfortably remains the market leader in these domains.

Chart: Infrastructure Platforms Revenues

Network Services

What is being offered?

Maintenance and troubleshooting services to help customers ensure their products operate efficiently, remain available, and benefit from the most up-to-date system, and application software across all components of a communication network.

Normally, both enterprises and service providers (the two main categories of network customers) either do not have sufficient expertise or simply do not wish to devote enough resources to maintain the networks themselves. Instead, they prefer that the network manufacturers maintain and upgrade their systems for them. This saves them the hassle of devoting time and resources to non-core activities.

Often, network manufacturers offer time-bound contracts for their maintenance services, which typically begin from the time the networks are sold to the customers. These contracts can be (and normally are) periodically renewed and service terms (and costs) renegotiated.

Who is buying?

All network owners including enterprises and Internet Service Providers. In fact, any entity that owns and operates a communication network is a potential customer.

Competitors

Other network equipment manufacturers

What do customers care about?

  1. Reliability of service
    • Help should be available on demand and round-the-clock, i.e. network breakdowns should not be left unattended for long as that affects a company's performance
  2. Quality of service
    • Customer care representatives should be knowledgeable about the products.

Cisco's Top Selling Points

  1. Wide scale and reach
    • Can provide instant support across different geographies
    • Since it produces and sells all components of a network, it can troubleshoot and help with the maintenance of entire networks - something which its competitors are hard-pressed to do.
  2. High customer service standards
    • Cisco devotes considerable amount of resources to maintain high standards for its customer care service and support.

Network Services Revenues

This represents revenues generated by Cisco through its services offerings including technical support services and advanced services.

Services Revenues increased from $11 billion in FY'2014 to $12.3 billion in FY'2017 as revenues in core product segments slowed down.

Chart: Network Services Revenues

Applications

What is being offered?

This division includes voice, video, data, and mobile applications on fixed and mobile networks across a broad range of devices or endpoints and related IT equipment such as mobile phones, tablets, desktop and laptop computers, and desktop virtualization clients. This also includes the former Service Provider Video (SPV) segment which includes end-to-end digital video systems, Data Over Cable System Interface Specification (DOCSIS) and access equipment. These products enable service providers and content originators to deliver entertainment, information, and communication services to consumers and businesses.

The product areas within the Collaboration segment are:

  1. Unified Communications
    • Internet Protocol (IP) Phones
    • Call Control, Call center and Messaging
    • Software-based Instant Messaging (IM) Client
    • Communication Gateways & Unified Communication
  2. Conferencing
    • Cisco WebEx
    • Cisco Telepresence Server
    • Cisco Telepresence Conductor
  3. Collaboration Endpoints
    • Collaboration desk endpoints
    • Collaboration room endpoints
    • Immersive systems
  4. Business Messaging
    • Cisco Spark

The product areas within the SPV segment are:

  1. Cable Access/Infrastructur
    • Cable modem termination systems (CMTSs)
    • Hybrid fiber coaxial (HFC) access network products
    • Network Function Virtualization (NFV) products
  2. Service Provider Video & Solutions
    • End-to-end video security solutions
    • Virtualized video processing (V2P)
    • Cloud-based, SaaS-delivered end-to-end video entertainment solutions

Who is buying?

Large scale enterprises and small-and-medium businesses in the U.S. Large enterprises outside the U.S. Additionally, regional, national and international wireline carriers; Internet, cable and wireless providers.

What customers care about

  1. Reliability of products
    • Products should have a low failure rate
  2. Integration with existing infrastructure
    • Customers care about ease of use of products and integration on multiple platforms.

Cisco's Top Selling Points

  1. Wide scale and reach
    • Sales channels across different geographies helps reach all customers
    • Since it produces and sells all components of a network, it provide end-to-end communication solutions.
  2. Superior Products
    • Cisco's NFV capabilities are far ahead of competition
  3. Brand Recognition
    • Cisco is widely recognized as industry leader in most of the fields it operates in, and is a trusted brand across enterprise customers.

Competitors

  1. IP Phones - Avaya, Alcatel Lucent, Siemens, Polycom
  2. Cisco WebEx - Skype for Business, TeamViewer, join.me, GoToMeeting.
  3. Cisco Spark - Slack, Confluence
  4. Cisco Telepresence - Logitech LifeSize, Polycom, Radvision (now acquired by Avaya).
  5. Cable Infrastructure - Arris, Casa Systems

Applications Revenues

This division includes voice, video, data, and mobile applications on fixed and mobile networks across a broad range of devices or endpoints and related IT equipment such as mobile phones, tablets, desktop and laptop computers, and desktop virtualization clients. The product areas within the Collaboration segment are Unified Communications (IP Phones and software-based instant messaging client), Web Conferencing (Cisco WebEx, Cisco Telepresence), Collaboration Endpoints for desks and rooms, Immersive systems and Business Messaging (Cisco Spark). This also includes revenues from end-to-end digital video systems, Data Over Cable System Interface Specification (DOCSIS) and access equipment.

Collaboration has been a strong growth area for Cisco over the last few years due to strong demand for software products. Comparatively, growth from Cisco's IP telephony & hardware business has been limited. Cisco is increasingly transitioning from primarily a hardware-dependent business model to a more focused approach to software and subscriptions-based revenues.

However, Service Provider Video revenues have fallen in recent years, with the company selling off the Service Provider Video (CPE) business in FY'16.

Cisco's resulting Applications Revenues have fallen from $7.7 billion in Fy'14 to $5.2 billion in FY'17.

Chart: Applications Revenues

Security and Other

What is being offered?

This division incorporates three key product lines. Cisco reports these product lines as:

  1. Network Security products
    • Virtual Private Networks (or VPNs) - used by enterprises to allow teams and individuals located in different offices and different geographies to connect securely to a common resource such as a common database
    • Firewalls to ensure network security
    • These security features are becoming increasingly more important as the companies become more concerned about data
    • A number of equipment vendors including Cisco have started integrating these features within their networks.
    • Communication equipment to enable communication using optical fibers
  2. Other products
    • Other Revenues refers to the revenues that Cisco generates from the sale of other products and services such as Application Networking Services, Pure Digital and certain other emerging technologies.

Who is buying?

Primarily US enterprises

Competitors

Network Security Products - Juniper Networks, HP, Check Point and other smaller players.