Cisco faces significant challenges as it navigates structural changes and strives to capitalize on emerging AI opportunities. The company must focus on completing its restructuring goals, enhancing its platform-centric approach to networking and security, and leveraging AI-driven data center potentials.
In 2024, Cisco undertook a limited number of technology rollouts and experienced a notable drop in its networking revenue, reporting a 23% decline. Key developments included a bolstered partnership with Nvidia, which integrates Cisco’s Unified Computing System with Nvidia’s latest AI-capable servers. This integration aims to enhance performance for AI workloads, notably for tasks like training large language models.
Additionally, Cisco introduced AI Pods—preconfigured infrastructure packages that seamlessly integrate into existing data center and edge setups, featuring Nvidia’s AI Enterprise pretrained models. The company also upgraded its Nexus 9000 data center switch lineup, which is vital for AI strategies, and completed its acquisition of Splunk, looking to enhance its AppDynamics portfolio with improved performance monitoring tools.
In security, Cisco launched its Hypershield, an AI-based security fabric that will evolve to protect distributed applications and devices. This offering aims to autonomously segment networks during threats and deliver real-time exploit protection.
Experts suggest that 2025 is a pivotal year for Cisco, as the company undertakes ambitious internal changes while wanting to harness the AI opportunity in a dynamic environment. Leadership changes, such as the appointment of Jeetu Patel as chief product officer, are expected to unify Cisco’s product portfolio and drive alignment with growth sectors. This strategy involves creating a platform approach that integrates AI, observability, and security across Cisco’s services.
Looking forward, analysts emphasize a need for Cisco to rebuild its enterprise networking focus, adapt to an all-encompassing data center for AI applications, and prioritize security innovations. The expectation is for streamlined services that manage IT, operational technology, and cloud domains cohesively, enhancing user experience and policy enforcement.
The networking market is facing a tough spending climate, with many organizations reallocating budgets from traditional networking to higher-priority fields like AI and cybersecurity. Despite these challenges, Cisco must aggressively pursue AI opportunities, having flagged $1 billion in AI orders on the horizon for its fiscal year.
As data center interconnect deployments grow, Cisco must enhance its existing infrastructure, especially its Series 8000 routers and Nexus 9000 switches, to compete effectively with emerging players and technologies in the AI space. However, some analysts express concern that Cisco may find the AI landscape challenging to navigate compared to competitors operating in closer proximity to application demands.
For Cisco to thrive in 2025, it will need to target comprehensive IoT applications and real-world data integration while overcoming the strategic pressures posed by competitors aggressively pursuing these technological advancements.
