Survey: Networking Partners Weigh In On Cisco's Hyper-Converged, SDN, Software And Security Strategies

The VAR View On Cisco

Networking solution providers have high hopes for Cisco's future in security, software-defined networking, unified communications and next-generation data centers. But they also feel Cisco needs to show its ability to sell and execute on software, and could use more juice around hyper-convergence.

Those are some of the results found by financial adviser and researcher UBS, which recently conducted a survey of 50 VARs about their growth expectations and views about Cisco in an array of market segments. The survey also asked them to compare Cisco head to head with vendors like Arista Networks, Hewlett Packard Enterprise, Dell and Juniper Networks on channel compatibility.

"We think Cisco is the best-positioned systems company given its dominance in networking, … trusted position with customers, and above-average management that appears especially forward-looking under CEO Chuck Robbins," said UBS analyst Steven Milunovich, who wrote a report based on the survey. "Cisco has opportunities in security and data center that are underappreciated by the Street."

The Survey

UBS surveyed 50 networking solution providers in April and the beginning of May. Of the 50, 25 of the respondents were from the U.S., 20 were from Europe and five were based in the Asia/Pacific region.

Security High Hopes

About 44 percent of the survey respondents said they expect Cisco to gain share in network security, while 32 percent predicted Cisco will maintain its current momentum in the network security market. Only 10 percent said they think Cisco will lose share.

Cisco's security business is on a $2 billion run rate and is increasing head count 15 percent year over year, according to UBS.

"Cisco does appear to be getting its act together in security -- its top priority -- which should help the company grow share over the next few years from its current 8 percent," said Milunovich. "The VARs indicated that Cisco's security strategy is resonating."

"Cisco made a huge investment in security," said Phil Mogavero, vice president of Advanced Technology Group network solutions and regional chief technology officer at El Segundo, Calif.-based PCM, a top Cisco partner. "They've got a nice positioning statement now, good products and [are] beginning to execute on that strategy."

Cisco Software Future

Cisco still has "some work to do" to create more awareness of its Cisco One software bundles, said UBS' Milunovich. The integrated software suites are being used by Cisco to engineer a multi-year transition to generate more software and annuity sales.

About 40 percent of VARs said they haven't heard of Cisco's One software bundles, while an additional 20 percent said the software bundles aren't resonating in the market. About 34 percent of VARs said the bundles are resonating modestly, while only 6 percent said the software is resonating strongly in the market.

"We are skeptical that Cisco can turn the traditional hardware-based switching and routing business into software," said Milunovich.

Who's The Easiest Vendor To Work With?

UBS asked the VARs which were the easiest and hardest vendors to work with, of Arista Networks, Brocade Communications, Cisco, Dell, HPE, Juniper Networks and VMware.

Nearly half said Cisco was the easiest vendor to work with, while Arista and Brocade were relatively harder to work with.

The breakdown of the results:

"Easy To Work With": Cisco, 58 percent; HPE, 46 percent; Dell, 34 percent; VMware, 32 percent; Juniper, 30 percent; Brocade, 26 percent; Arista, 10 percent.

"Hard To Work With": Arista, Dell, HPE, all around 22 percent; VMware, 20 percent; Juniper, 16 percent; Cisco, 15 percent; Dell, 14 percent.

Next-Generation Data Center

Regarding which vendor has the best vision, product road map and technology for next-generation data center, a whopping 80 percent of VARs selected Cisco. The remaining vendors -- Arista, Brocade, Dell, HPE and Juniper -- scored very low, in single digits.

About 60 percent of the VARs felt the acquisition of CliQr for hybrid cloud orchestration and introduction of new Nexus 9000 switches will help Cisco gain share in the data center.

Hyper-Convergence

Cisco introduced HyperFlex in March along with a partnership with SpringPath to use the vendor's software-defined storage technology.

The survey results about HyperFlex were mixed, with 30 percent of respondents saying they had either great or moderate interest in the solution, while 42 percent said they haven't heard of it yet. About 26 percent of VARs say they have low interest.

Sources told CRN this month that Cisco is in talks with hyper-convergence startup Nutanix on a possible strategic partnership.

SDN Controller/Software Leader

Cisco is maintaining its software-defined networking leadership position by being the preferred vendor for SDN controller/software overlay, according to the survey.

VARs said their most preferred solution for SDN controller/software was Cisco APIC (Application Policy Infrastructure Controller) with Cisco ACI as well as Cisco's OnePK (Open Network Environment Platform Kit).

Next in line was VMware's NSX, followed by Microsoft with its System Center with Windows Server, OpenDayLight, Juniper Network's Contrail and then Nuage Networks, a subsidiary of Alcatel-Lucent.

Physical SDN Leader

Cisco was also the preferred vendor for the physical underlay in SDN. HPE came in second, followed by Brocade, Juniper, Arista and Dell.

"Dell and Arista received relatively weak exposure, but we note that Arista has higher exposure to cloud vendors like Facebook and Microsoft," said Milunovich.

Wireless LAN

The majority of respondents expect Cisco to maintain or gain share in Wireless LAN, with more than two-thirds expecting to deploy 802.11 ac Wave 2 deployments either this year or in 2017.

"We see this as being doubly positive for Cisco, because Wave 2 deployments typically also trigger an upgrade of switching infrastructure," said Milunovich.

About 46 percent of VARs expect Cisco to gain share in the wireless LAN market, while 42 percent expect Cisco to maintain its current share. Only 6 percent said they expect Cisco to lose share in the space.

Unified Communications And Collaboration

Two-thirds of the VARs said they think Cisco will gain or maintain share in the unified communications and collaboration (UC&C) space.

Cisco is the worldwide UC&C market leader, owning 16 percent of the market, while Microsoft trails in second at 13 percent. The networking leader overhauled its Cisco Spark flagship collaboration tool late last year.

PCM's Mogavero said Spark is gaining momentum in the market as a solution that provides simplicity. "That simplicity will be very good for Cisco to extend its reach into the lower end of the midmarket," he said.

Sales Growth For Cisco, Juniper, Arista, Brocade

The VARs were asked about their sales growth expectations for their current quarter (second quarter) compared to their previous quarter (first quarter) for Cisco, Juniper, Arista and Brocade.

VARs said they expect Cisco sales growth to increase more than 2 percent from Q1 to Q2. VARs are predicting Arista and Brocade sales stay relatively flat, while they expect Juniper sales to decrease about 1 percent.