Since Robbins coming into office, the company announced major partnerships with Apple and Ericsson and four takeovers that cost the tech giant about half a billion dollars. The moves were part of a larger plan to encourage growth with services and software.
In October, the new CEO promised investors that the company would not slow down its brisk acquisition pace set by his predecessor before reaping all the benefits from next-gen technology.
“I do really feel we’re on the verge of a huge opportunity,”
the new CEO told shareholders early last month.
At that time, Robbins seemed focused on services and software growth solely and repeatedly used key words such as ‘the cloud,’ ‘network security,’ ‘data analytics,’ and new acquisitions. Cisco CFO Hilton Romanski explained in October that acquisitions play a key role in driving growth financially and differentiating the company from competitors.
So far, promises were kept – Cisco unveiled four acquisitions and two partnerships in just one quarter. The largest acquisition was network-software company Lancope Inc., which cost the company a whopping $500 million. Other acquisitions were smaller and focused on cloud technology, data-analytics and security know-how.
But the biggest surprise was the deals with Apple and Ericsson, which were planned ahead by Chambers and finalized by Robbins. Cisco partnered with Apple to make sure that its software will run on iPhones and iPads . Apple will benefit from the partnership as well since it now struggles to convince other tech giants to use its hardware.
The deal with Ericsson is expected to bring each company an extra $1 billion in three years’ time. Cisco will benefit from its partner’s telecom customers, while Ericsson will benefit from Cisco’s service and software expertise.
Analysts estimate that the deal with Ericsson would help Cisco strengthen its position on the service provider market and fare better on a ‘digitized economy’ such as the Internet of Things (IoT).
All in all, recent deals and partnerships underscore the importance of services and software in the company’s further development. Although Cisco is better known as a networking giant, it now talks less about the networks it builds and focuses more on the apps it tries to sell to secure and manage those networks.
This move is driven by investors’ appetite for rapid growth, which just doesn’t happen when it comes to network hardware. For instance, sells of routers and switches slightly dropped since 2013 from $22.88 billion to $22.44 billion.
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