Cisco Systems Inc Corporate Call - Goldman Sachs to Host Tech Talk With Cisco Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Simona Jankowski - Goldman Sachs - Analyst : Thanks, Maciej, I appreciate that comprehensive overview. Maybe just to kick off the Q&A, wanted to pick up on one of the last points you made there, which is that this is already a multi-billion dollar business for Cisco. I think one of the last updates on that specifically was last October, at the IoT World Forum in Chicago, where you said it was a $2.4 billion business at the time, growing at 45%. Any update you can provide on how you would size that today?

Question: Simona Jankowski - Goldman Sachs - Analyst : And just on that third point you made, the 3 to 1 pull-through. What did you mean by that?

Question: Simona Jankowski - Goldman Sachs - Analyst : And you mentioned earlier in the deck that there are about 800 products now that Cisco would designate as IoT or IoE products. Can you just help us think about what those are? Because you also talked about combining horizontal components into -- with a vertical solution overlay. So should we be thinking about those as just the exact same switch or router or Wi-Fi access point that might go into an IT environment? Or do these products have any kind of hardening, or any kind of longevity or warranty attached to them or any kind of software that makes them uniquely suited for IoT, and therefore part of that 800-product catalog? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Simona Jankowski - Goldman Sachs - Analyst : Yes. That's helpful. Maybe just a follow-up on the point you made about analytics. And just before I ask the question, I did want to clarify a couple of things you said. I think at one point, you said that about 40% of the IoE value would be delivered by analytics. And that I think later, you said also that 40% of data will likely be analyzed at the edge, as opposed to being hauled over to the cloud. First of all, were those just -- is that the same data point, just said two different ways? Or were these two separate statements that just both happened to be 40%?

Question: Simona Jankowski - Goldman Sachs - Analyst : Okay. Okay, helpful. And then just on the data analytics question. So clearly, Cisco has been investing a lot in analytics, both organically and through acquisitions. And even in that truck example you gave, clearly, it seems like the vast majority of the value there is delivered by the analytics capability, as I don't imagine that truck carrying around an enormous switch or router to do the job. But I think the analytics is key. And so with that in mind, do you guys feel that the analytics portfolio within Cisco is now fully fleshed out? Or do you feel like there's still additional development, whether organic or inorganic, that you need to get you there?

Question: Simona Jankowski - Goldman Sachs - Analyst : And the other interesting point you made is that your approach is to effectively take your horizontal solutions, and then add verticalization or specialization on top of that, via software or services. And I think you said that about 20% or 40% of the solution is going to come from that type of customization, as opposed to the off-the-shelf modules. Curious how you approach that customization process, vis a vis engaging your partners and minimizing conflict with the partners? Because I traditionally think of them, in a lot of ways, as having that role of adding that customization and building the solution. So how does Cisco navigate that?

Question: Simona Jankowski - Goldman Sachs - Analyst : Okay. One of the questions that I get from investors a fair amount, when we talk about IoT is, why is this that incremental or that significant? As they think about even that vending machine example you gave, there's just not a lot of incremental data that a lot of these connected devices are generating, relative, for example, to somebody streaming an HD video, which does create a lot of data. So why can't that just be absorbed in what is the existing curve -- demand curve for internet data growth? Why does Cisco view that as an inflection?

Question: Simona Jankowski - Goldman Sachs - Analyst : And is it fair to say there's also a bit of a business versus consumer distinction that, as an over-generalization on the industrial or on the business side, the data requirements tend to be quite a bit larger?

Question: Simona Jankowski - Goldman Sachs - Analyst : Yes. Okay. That's helpful. I think Intel had shared a similar statistic at one point, that 85% of all devices today that have computing capability are not yet connected. And I think that's pretty interesting, as well.

Question: Simona Jankowski - Goldman Sachs - Analyst : And maybe just last question for me, on that point, before checking for any additional questions from the audience. When we think about standards around IoT, it seems like one of the obvious potential hurdles here is just the ability to inter-operate with billions of devices out there. And so the industry has tried to solve, or least address the problem, through the creation of a bunch of industry consortia. But it's almost like you're now seeing fragmentation of the consortia themselves. You've got, as you mentioned, the Open Interconnect Consortium. But there's also the Industrial Internet, the All Seen Alliance, you've got Google's Thread, and so on and so on. So how do you see all of those standard-setting bodies or consortia coexisting? And will they actually solve the problem that they've set out to solve? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Simona Jankowski - Goldman Sachs - Analyst : Yes. No, that makes a lot of sense. Okay, so John, let's see if there's any questions in the audience. And again, you can alternatively email me your question at Simona.Jankowski@GS.com. John?

Question: Simona Jankowski - Goldman Sachs - Analyst : (laughter) Congrats, Maciej, you made it very, very clear. And we very much appreciate you joining us for this call. Thank you for sharing your thoughts and perspective, and obviously, we will look forward to staying in touch, and watching what Cisco does in this space. Appreciate it.

Question: Simona Jankowski - Goldman Sachs - Analyst : Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.