Cisco's Chuck Robbins On Q3 Networking Declines, Springpath, Intercloud's Future And Forging Tighter Ties With VMware

Robbins On The Record

After beating Wall Street estimates for its third fiscal quarter, Cisco CEO Chuck Robbins talked to CRN about the networking giant's future in hyper-convergence and storage as well as the quarter's revenue declines in its bread-and-butter switching and routing businesses.

On Wednesday, San Jose, Calif.-based Cisco reported a 3 percent decline in switching and a 5 percent drop in routing year-over-year. "I don't think it has anything to do with our partners underperforming," said Robbins, in an interview with CRN.

Robbins also weighs-in about Cisco's hyper-converged partnership with Springpath, the importance of the recent acquisitions of Jasper Technologies and CliQr, and if Cisco plans to revamp its Intercloud strategy.

When you look at the routing and switching numbers for the quarter, does that mean the channel was underperforming for you?

No, I do not think that's what that means. If you look at our switching business, we've talked about the fact that the campus switching which is two-thirds of the business, is largely a refresh-driven business. So anytime there's uncertainly in the macro-[economic] environment, which clearly since January we've seen it at various levels, we tend to see customers sort of hold off on those refreshes. The good news is our data center switching portfolio, which is $4 billion, grew in double-digits, which really says customers are embracing it. Our new platforms – the Nexus 3000, [Nexus] 9000 – are now at a $2.2 billion run rate and grew at 100 percent last quarter, so I think that was more reflective on the campus side of the refresh cycle slowing down due to the macro uncertainty. Routing is largely a large service provider-related issue, so I don't think it has anything to do with our partners underperforming.

Are you happy with the Springpath technology so far? What does Cisco need to do to become the hyper-converged infrastructure leader?

Yes, we are happy with our Springpath relationship. The way we measure success on these early technologies is through the number of customers that have adopted the technology, and we obviously were late in the quarter as we began to really see momentum in that platform, so at the end of the next 90 days we'll get some metrics around that, but the pipeline is strong. The early feedback that I'm getting from the field teams is positive. So we'll see how it goes.

What is the status of Intercloud? Is it the future of Cisco's cloud strategy?

Our cloud strategy, even with the Intercloud launch was really comprised of three primary elements. The first was to provide standardized infrastructure to our service provider partners around the world off which they could run virtual managed services and Cisco offers, and that still stands … They're standing up instances of WebEx, Meraki, so that's happening. We also referenced that selling infrastructure to web-scale providers is also part of that first pillar. That business was up 31 percent this past quarter, and I think it was up 17 percent the prior quarter. The second pillar was around us delivering everything we sell as-a-service, if our customers would like to procure it that way. We've made significant progress by scaling the Meraki business and evolving both the collaboration and security businesses, [and they] are both high growth businesses for us, but also have made the shift to subscription and SaaS offers.

And the third element?

The third element was, we were going to enable our customers to really drive a hybrid cloud strategy, which is what we've contended all along that they would want. I think if you look at our data center switching performance, it's a $4 billion run rate business, and our orders were up double-digits this past quarter. That in conjunction with CliQr and the work that we're doing on workload mobility suggest we're making progress in that space as well. Those are the three pillars of how we view it. We think that hybrid cloud enablement is the core element as well as continuing to evolve everything we sell as a cloud service.

In that hybrid cloud model, what does Cisco need to do to make sure there's a software stack there that keeps networking compelling?

If you look at this movement we have from 18 billion connected devices to 50 billion, to 100 billion to 500 billion, I think the network is going to be relevant. It's going to be more distributed than it's ever been. The Jasper [Technologies] platform today is pushing 30 million connections, adding a million a month. So the network and connectivity layer will be quite relevant. As it relates to cloud and hybrid cloud, building the stack with CliQr and ACI (Application Centric Infrastructure), and some of our other capabilities that we'll be launching, we will be able to enable our customers to drive policy and workload consistency across both private and public clouds, and we think that's what they'd like to see us do. That's what they're telling us they would like to see us do.

Can we expect to see a closer relationship with VMware under your leadership?

My perspective on these partnerships is that there's a balance between what our customers want to see and the competitive nature of the partnerships. [An] example is Microsoft. Our customers have wanted us to drive greater interoperability in our collaboration portfolios and I think that's something both of us should consider, and we're having conversations about it.

As it relates to VMware, I think our teams are talking about where there might be points that balance the competitive nature of the partnership, but also meet perhaps some of the emerging customers "asks." So I think it that's to be determined.

Are you happy with Cisco's position now with Dell-EMC looming? What's your vision for Cisco's storage strategy looking down the line?

As it relates to storage, I've said all along that our partnership strategy has worked. VCE continues to grow, our customers are quite happy with it. We've seen great success with FlexPod [with NetApp]. We've actually seen a lot of traction with IBM with VersaStack. So our commitment is still to these partnerships because I believe that's what our customers would like to see us do. At any point in the future if the customer feedback is that we need to do something differently, then we'll take that assessment and look at it. But right now I think we're very pleased and the partnership model seems to be working.