John Chambers says Cisco is winning back customers it lost to VMware.

Mitch Wagner, Executive Editor, Light Reading

May 15, 2014

3 Min Read
For Cisco, Is 'SDN' Code for 'Crush VMware?'

When Cisco's John Chambers cited SDN as one of the company's strengths in an earnings call with analysts Wednesday, at least one industry watcher heard "SDN" as code for "crush VMware."

"A cheerful John Chambers told Wall Street analysts on Wednesday that his plan to crush his biggest threat, a new technology led by VMware, is working well," Julie Bort wrote on BusinessInsider.com. (See Cisco Earnings Suffer From Carrier Weakness.)

Bort described SDN as "being led" by VMware Inc. (NYSE: VMW) following its acquisition of Nicira. She called Nicira's founder "more or less" the inventor of SDN. (See Defining SDN & NFV and Does Cisco Need Nicira?)

Figure 1: (Source: Brent Moore/CC 2.0) (Source: Brent Moore/CC 2.0)

A year ago, Cisco had no SDN product and dismissed the technology. Now its Application Centric Infrastructure (ACI) is the company's SDN offering, using technology from Insieme, which Cisco bought. Chambers said Wednesday that Cisco is taking almost all the customers it lost following VMware's Nicira acquisition. (See Cisco Asks the Killer SDN Question.)

More than 50 customers are testing Cisco's ACI SDN software, he said, and it has sold 175 Nexus 9000 routers running ACI. Bort said its goal is to get those customers, not necessarily to commit to ACI, but simply to wait and not jump to competitors. (See Cisco's ACI Gets Physical With SDN.)

As SDNCentral's Craig Matsumoto noted in a blog post Wednesday, Chambers said the number of ACI customers has gone from more than 20 last quarter to 175 this quarter, and the pipeline is "approaching 1,000 customers.

However, that's only a small part of Cisco's customer base. And Matsumoto said the number appears to count all Nexus 9000 customers, the majority of which aren't actually using SDN.

Cisco shares were trading at $24.355 around 3:00 p.m. EDT today, up $1.5451 from this morning. The stock closed at $22.8099 Wednesday.

I'm not sure I agree with Bort's analysis. I see Cisco's ACI as a reaction to the SDN threat as a whole, not just VMware. And even though VMware is one of the leaders in SDN, I would not say it's driving the movement.

Nevertheless, big technology incumbents often fixate on a single competitor, and VMware is as good a target as any for Cisco's hostility. Certainly, when I talk with VMware people, they seem to be fixated on Cisco -- as are those at every other company that attempts to compete with it.

— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to [email protected].

Want to learn more about SDN and the transport network? Check out the agenda for Light Reading's Big Telecom Event (BTE), which will take place June 17 and 18 at the Sheraton Chicago Hotel and Towers. The event combines the educational power of interactive conference sessions devised and hosted by Heavy Reading's experienced industry analysts with multi-vendor interoperability and proof-of-concept networking and application showcases. For more on the event, the topics, and the stellar service provider speaker lineup, see Telecommunication Luminaries to Discuss the Hottest Industry Trends at Light Reading's Big Telecom Event in June.

About the Author(s)

Mitch Wagner

Executive Editor, Light Reading

San Diego-based Mitch Wagner is many things. As well as being "our guy" on the West Coast (of the US, not Scotland, or anywhere else with indifferent meteorological conditions), he's a husband (to his wife), dissatisfied Democrat, American (so he could be President some day), nonobservant Jew, and science fiction fan. Not necessarily in that order.

He's also one half of a special duo, along with Minnie, who is the co-habitor of the West Coast Bureau and Light Reading's primary chewer of sticks, though she is not the only one on the team who regularly munches on bark.

Wagner, whose previous positions include Editor-in-Chief at Internet Evolution and Executive Editor at InformationWeek, will be responsible for tracking and reporting on developments in Silicon Valley and other US West Coast hotspots of communications technology innovation.

Beats: Software-defined networking (SDN), network functions virtualization (NFV), IP networking, and colored foods (such as 'green rice').

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