Cisco Systems Inc and JPMorgan Chase & Co to host a Tech Talk on Cisco’s Enterprise Networking Strategy Transcript

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

Question: Samik Chatterjee - JP Morgan Chase & Co, Research Division - Analyst : Scott, so thanks for joining us. Let me just kick it off with kind of more of a question that's separate from some of the recent announcement. If you take a step back and talk about the transformation in the industry towards more automation, reduced operational expenses as we've been talking about intent-based networking as helping to deliver value on that front with customers, a lot of investors that we see do consider that kind of as a marketing terminology, more than kind of appreciating what value it brings to customers. So are we more interested in starting off, to kick this discussion off in understanding how are your customers reacting to intent-based networking. What are they seeing in terms of value from intent-based networking?

Question: Samik Chatterjee - JP Morgan Chase & Co, Research Division - Analyst : Got it. That comment on security was definitely interesting, and probably we'll touch on that a bit more as we get to some of the topics here. But let me just kind of then follow up the discussion on intent-based networking with your campus networking products have shown strong adoption with the kind of introduction of intent-based networking. But when I was talking to Ish from the data center side of things in your company, he REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 02, 2019 / 3:00PM, CSCO.OQ - Cisco Systems Inc and JPMorgan Chase & Co to host a Tech Talk on Cisco's Enterprise Networking Strategy mentioned to me that this was a capability that was first adopted in data centers. Can you just talk about the road map in getting intent-based networking from the data center to campus products? What kind of led to that? What was the road map there?

Question: Samik Chatterjee - JP Morgan Chase & Co, Research Division - Analyst : Got it. Got it. Okay. That makes sense. So now let's dig a bit deeper into the campus environment here. Now overall, campus is like -- probably like something like a $15 billion market according to some third-party estimates that we look at. Now when we talk about intent-based networking, which parts of the campus do you see driving the most value? Like in the sense that which parts of the campus are your customers consuming most of their IT resources in just maintaining and running networks and where intent-based networking can deliver the value in terms of the automation, et cetera, that you talked about?

Question: Samik Chatterjee - JP Morgan Chase & Co, Research Division - Analyst : Okay. No, that's helpful kind of segmenting the opportunity there for us. So when I think about the success that you've had 'til date with intent-based networking with your customers, which are the other parts of your product portfolio that you see an opportunity to drive these capabilities further and kind of leverage the success you've had with the existing products?

Question: Samik Chatterjee - JP Morgan Chase & Co, Research Division - Analyst : Yes. No, definitely look forward to those announcements. Now let me just kind of move slightly away and ask you to compare against your competition here. So Arista refers to their automation capabilities in the data center that's kind of state-based NetDB functionality. Can you just try to explain to investors the difference between the 2 approaches that you -- kind of based on your understanding between Arista's NetDB as well as your intent-based networking? And do you see Arista looking to extend these capabilities that they have into the campus environment as well?

Question: Samik Chatterjee - JP Morgan Chase & Co, Research Division - Analyst : Yes. No, got it. Got it. That's helpful. On the wireless side, just moving towards -- the discussion towards wireless a bit here. I believe you're still waiting for finalization of standards for WiFi 802.11ax. When you kind of look at WiFi, the new WiFi standards or WiFi 6, as it's properly called by the industry, what are you seeing as kind of the top use cases for a WiFi 6?

Question: Samik Chatterjee - JP Morgan Chase & Co, Research Division - Analyst : So that's kind of what improvements or kind of features that are coming with WiFi 6. Now how should I think of layering intent-based networking as a functionality on top of that? Like how much of a value-add can intent-based networking bring to the wireless LAN portfolio, particularly in context of WiFi 6?

Question: Samik Chatterjee - JP Morgan Chase & Co, Research Division - Analyst : Got it. Got it. So where do we stand -- where does Cisco stand today related to kind of product announcements for wireless LAN products based on this new WiFi standard? Like we've seen some smaller players, like Aerohive announce products ahead of even the finalization of the standards. But are you really seeing any benefits here of being a first mover into this market? Are you seeing enterprises like try out some of your competitor products already? What are you seeing on the ground, I guess?

Question: Samik Chatterjee - JP Morgan Chase & Co, Research Division - Analyst : Got it. Got it. So with WiFi 6, I mean, more with WiFi broadly, what we kind of see investors being concerned about or kind of questioning is how does -- and you referred to kind of 5G, 4G interplay with WiFi a couple of times here, but investors really question kind of how much does 5G cannibalize WiFi as a substitute -- becoming a substitute for WiFi. Because with companies like Verizon kind of talking about fixed wireless, et cetera, there seems to be a building anticipation that, in some cases, 5G can become a substitute for WiFi. What's your view on that? Do you see these technologies being kind of exclusive in the future or kind of coexisting? How are you guys thinking about it?

Question: Samik Chatterjee - JP Morgan Chase & Co, Research Division - Analyst : Got it. No, that's helpful. And let me then kind of take it back to the initial discussion. We were -- so we started off with around security and your comments around that. So how should we think about the security stack on a wireless LAN product? And when you think about kind of security being a differentiator ahead of competition, how are you going to -- how is Cisco positioning itself for security as a competitive differentiation on the wireless LAN product hopefully as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 02, 2019 / 3:00PM, CSCO.OQ - Cisco Systems Inc and JPMorgan Chase & Co to host a Tech Talk on Cisco's Enterprise Networking Strategy

Question: Samik Chatterjee - JP Morgan Chase & Co, Research Division - Analyst : Got it. No, that's helpful to understand kind of how security could play a part here as well. Let me just stop there briefly and in the interest of time, just check. Operator, can you check if there are any questions on the line? I do have a few more, including one from a client on the e-mail. But let me just ask the operator to queue up and see if there are any questions right now.

Question: Samik Chatterjee - JP Morgan Chase & Co, Research Division - Analyst : Let me just continue while we're pooling for questions with a question that I received on e-mail. And the exact kind of question that we received is, "Are you diversifying your ASIC suppliers or increasing the internal ASIC to more boxes going forward? Where is the internal ASIC differentiation most evident?" So I understand you might not be able to get into the details about kind of future product plans as much, but I would be more curious if you can broadly share how you're thinking about kind of merchant silicon versus kind of more custom silicon and in campus products particularly and how you think about competitive differentiation relative to your strategy there.

Question: Samik Chatterjee - JP Morgan Chase & Co, Research Division - Analyst : Got it. Got it. Operator, do you have any questions right now?

Question: Samik Chatterjee - JP Morgan Chase & Co, Research Division - Analyst : Okay. As a reminder to those of you in the audience, if you don't want to ask a question directly and want us to ask it on your behalf, again, the e-mail address is tech Scott, if we just kind of follow up with the last couple of questions here while we wait to see if there are any questions from the audience directly. Now just curious about the go-to-market strategy on the wireless LAN front because, definitely, there's a lot of stuff happening around kind of the upgrade of the WiFi network, particularly with the standard change that's happening. When you think about the go-to-market strategy here with the portfolio of wireless LAN products, is the focus going forward going to be more on selling subscriptions to clients? Or is the focus going to be in terms of selling the customer both like a wireless LAN hardware as well as a campus switch hardware bundled together?

Question: Samik Chatterjee - JP Morgan Chase & Co, Research Division - Analyst : Got it. Got it. Last question from my side. I mean, we've seen a lot of M&A activity in the wireless LAN space with the acquisition of Mojo by Arista and Mist by Juniper. Can you just walk us through how you're looking at the changes in the competitive landscape and how does it impact probably like your majority market share in wireless LAN? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 02, 2019 / 3:00PM, CSCO.OQ - Cisco Systems Inc and JPMorgan Chase & Co to host a Tech Talk on Cisco's Enterprise Networking Strategy

Question: Samik Chatterjee - JP Morgan Chase & Co, Research Division - Analyst : Got it. Got it. Okay. Great. I know you have a hard stop at 45 minutes, so what I'll -- definitely appreciate the time you've taken. And Gloria, I'll hand it over to you in case you want to close out the call or were there any final remarks before you close out the call?