Cisco Aims to Change Economics of the Internet

Introduces new chip and networking gear, promises more investments in optics technologies

Cisco Systems is taking the next steps in its years-long strategy to build the networking infrastructure officials said will be needed to run such advanced workloads as artificial intelligence (AI), 5G, virtual and augmented reality, and cybersecurity, as well as the expanding cloud and Internet of Things (IoT) environments.

The Lowdown:  At an event in San Francisco this week, the company unveiled a new networking chip and platform, and reinforced its efforts to continue investing in optics and silicon photonics technologies that will be important as infrastructures see networking speeds continue to ramp up and organizations look to scale their operations while reducing costs.

The Details:  With the revamped strategy, Cisco also is looking to reduce the costs for enterprises and cloud service providers as they build their infrastructures over the next decade. At the event, Cisco announced:

> Cisco Silicon One: A new chip architecture that can run anywhere on the network and in both fixed and modular platforms that will soon support speeds of up to 25 Terabits per-second (Tbps). A single programmable chip that can be placed throughout the network rather than using multiple chips for different jobs will reduce costs and accelerate the rollout of services. The first chip, the Silicon One Q100, will support more than 10 Tbps of network bandwidth.

> Cisco 8000 series: The first networking platform based on the Silicon One Q100 and running Cisco’s new IOS XR7 network OS is aimed at service providers and web-scale companies looking to build huge networks needed for 5G, AI, and IoT. It’s designed for 400 Gbps per port and 10.8 Tbps in a single rack and offers enhanced cybersecurity with integrated trust technology. Cisco is running trials and deploying the 8000 Series with such customers as service providers STC, Comcast, and NTT Communications.

> Optics investments: Optics technologies will be a key as network port rates increase from 100G to 400G and more. Cisco announced in July it was buying optical interconnect vendor Acacia for $2.6 billion and also has launched a qualification program to test optics to ensure they meet industry standards and can run in Cisco and non-Cisco systems. The company also is investing in silicon photonics, which officials said will drive new form factors and operational simplicity in networking infrastructure. Cisco last year bought silicon photonics vendor Luxtera.

> Flexible consumption models: Cisco already offers different buying options for its optics offerings and IOS XR7, and now it’s expanding those options to Silicon One. They include a choice of components and whether to run white boxes or integrated Cisco systems in a network.

The Impact:  Despite the rise in competition and trends like software-defined networking (SDN) over the past decade, Cisco is still the dominant player in networking and through its position and size can influence the direction of the market and address the needs of large-scale organizations that run massive data centers. Companies like Microsoft, Comcast, AT&T, CenturyLink, Walt Disney Studios, and Facebook have signed on to Cisco’s strategy.

Background:  On the other hand, Cisco is still dealing with the fallout of a difficult quarterly report from October that saw revenue increase 2% year-over-year – to more than $13.1 billion – but also forecast current-quarter revenue to fall by 3% to 5%. In the aftermath, Cisco last month announced it was merging its enterprise and data center businesses and renaming its cloud division, which is now Cloud Strategy and Compute.

The Buzz:  “Innovation requires focused investment, the right team, and a culture that values imagination,” said Cisco Chairman and CEO Chuck Robbins. “We’re dedicated to transforming the industry to build a new internet for the 5G era. Our latest solutions in silicon, optics, and software represent the continued innovation we’re driving that helps our customers stay ahead of the curve and create new, groundbreaking experiences for their customers and end users for decades to come.”

“Pushing the boundaries of innovation to the next level — far beyond what we experience today — is critical for the future, and we believe silicon, optics, and software are the technology levers that will deliver this outcome,” said David Goeckeler, executive vice president and general manager of Cisco’s Networking and Security Business. “Cisco’s technology strategy is not about the next generation of a single product area. We have spent the past several years investing in whole categories of independent technologies that we believe will converge in the future — and ultimately will allow us to solve the hardest problems on the verge of eroding the advancement of digital innovation. This strategy is delivering the most ambitious development project the company has ever achieved.”

“We look forward to working with Cisco as it enters the high-end routing silicon space, collaborating to help meet the next generation of network demands for higher speeds and greater capacity,” said Amin Vahdat, fellow and vice president of systems infrastructure at Google Cloud.

“Facebook has been a strong advocate for network disaggregation and open ecosystems, launching key industry initiatives such as the Open Compute Project and the Telecom Infrastructure Project to transform the networking industry,” said Najam Ahmad, vice president of network engineering at Facebook. “Cisco’s new Silicon One architecture is aligned with this vision, and we believe this model offers network operators diverse and flexible options through a disaggregated approach.”

“Cisco is changing the economics of powering the Internet, innovating across hardware, software, optics, and silicon to help its customers better manage the operational costs to function on a larger scale for the next phase of the Internet,” said Ray Mota, CEO and principal analyst at ACG Research. “As we move to 2020, the timing of delivering operational efficiency will be vital.”

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