In the face of mostly flat revenues and competition from new startups, Cisco hasn't been sitting on its hands the past five years. Cisco's announcements on Wednesday were noteworthy on several fronts, including that it spent $1 billion on research and development for its Silicon One chip that will be used from pizza box switches all the way up to an 18-slot router chassis.
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There are a lot of moving pieces and parts to Cisco's news from Wednesday, but its new proprietary switching and routing applications specific integrated circuit (ASIC) Silicon One is notable on several fronts.
Speaking at Thursday's Barclays Global Technology, Media and Telecommunications Conference, Cisco's Jonathan Davidson, SVP, general manager, service provider business, said that Cisco is supporting hardware vendors running its Silicon One chip on their own hardware and operating systems.
On the flip side, customers could also opt to use Cisco's new 8000 Series routers, which were announced on Wednesday, with their own operating systems (OS). The third leg of Cisco's willingness to embrace open architectures and white boxes includes using Cisco's new IOS XR7 operating system, which was announced Wednesday, but started shipping on a different platform in August.
"We have some customers that want to take that market-leading software and put it onto white boxes that we announced that we would do that almost two years ago, but we reinforced that yesterday," Davidson said, according to a Seeking Alpha transcript.
Sticking with the themes of openness and flexibility, Davidson also touted the service provider benefits of Silicon One and IOS XR7. While bandwidth consumption has gone up 30% to 50%, service provider capex has remained relatively flat since 2012, according to Davidson. For every dollar of capex that the operators are spending, they're spending $5 in opex, he said.
"So we need to not only help them (service providers) with innovation around the capex part of their budgets, but we also need to help them solve around operational costs of their infrastructure as well, and we do that through automation," Davidson said. "And we do that through this new Silicon One architecture and this new IOS XR7, which creates new interfaces that are much simpler to integrate into their backend IT systems."
Service providers can spend up to a whole year testing a new platform before deploying it, which means by the time they get it deployed they're a year behind, Davidson said. By contrast, hyperscale cloud providers are assembling their own networks using open source components and software, which enables them to move at a much faster rate.
"So if we can help them decrease the amount of time it takes to do that testing and do that backend integration," he said. "They actually can take advantage of what we're building in a much more rapid pace."
Davidson said Cisco has built a tool that lets its customers use a drop down-like menu of routers that it sells to service providers to pick the IOS XR7 version they want to use.
"They can actually then upload a configuration that they're putting on one of their existing routers," he said.
Davidson said Cisco has a machine-learning algorithm that looks at a service provider's entire configuration, and then starts building a list of tests that the service provider can run to make sure that version of code will on its platform.
"Typically, you would need a team of people and you would need months to do this," Davidson said. "We can actually build this test plan in a matter of minutes, and then if you want, you just push 'go' and you actually can run the test for them, if they so desire."
All of which decreases the time frame for shipping, testing and putting a new product into a network.
"We've been working very closely with a number of customers to help guide our development through this and we've had it in people's plans for how they've been deploying our technology in their networks for quite a while."
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When asked how Cisco's announcements this week impacted its competitors, which include Juniper Networks, Arista Networks and others, Davidson acknowledged that there has been leap-frogging from year-to-year between the vendors, but now Cisco has taken a dramatic leap.
"We decided to do things a bit differently this time," he said. "We started with a clean sheet silicon architecture. We didn't leverage any blocks or any capabilities from any prior-generation of silicon that we've ever built. We literally went clean sheet, which enabled us to really boil down to the fundamentals of what you need in this piece of silicon, and then actually be able to write and build that silicon very, very, very efficiently.
"We took a very clean sheet approach in building this Cisco 8000 Series as well. So, we're future proofed for future generations of technology."
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Davidson pointed out that one of Cisco's competitors announced products six to eight months ago, but they haven't shipped yet. Comparing those products to Cisco's 8000 routers, Davidson said Cisco has 75% less power utilization per 100-gig port than its competitor.
"So I think what we've seen in the past—they leapfrog us, we leapfrog them—we've got sustainable differentiation for several silicon generations to come," said Davidson, who also stressed that Cisco would still use third-party silicon going forward.