What will be hot for Cisco in 2019?

Software, SD-WAN, security, high-speed data-center networking, and more software fill up the Cisco hot plate for 2019.

Software, software, and more software. That seems to be the mantra for Cisco in 2019 as the company pushes software-defined WANs, cloud partnerships, improved application programs, and its over-arching drive to sell more subscription-based software licenses.

As the year closed on Cisco’s first quarter 2019 financials, the company was indeed touting its software growth, saying subscriptions were 57 percent of total software revenue, up five points year over year, and its application software businesses was up 18 percent to $1.42 billion. The company also said its security business, which is mostly software, rose 11 percent year over year to $651 million.

And that’s not to mention the company’s total product revenue was up 9 percent to $9.9 billion, which included a 9 percent growth in its switching and router business to $7.64 billion.

Not a bad way to start a year.

So, where does Cisco go in 2019? A good place to look is the all-consuming cloud arena.

Cisco: A cloud vision

“I think that what we’re beginning to see … is that while the cloud four or five years ago was viewed as an existential threat to our business, I fundamentally believe that the cloud and the transition to the cloud that our customers are undergoing is actually driving our growth now,” Cisco CEO Chuck Robbins said at the company’s Q1 financial teleconference in November.

Indeed Cisco made a ton of cloud moves in 2018, including an agreement with Amazon Web Services (AWS) that will offer enterprise customers an integrated platform that promises to help them more simply build, secure, and connect Kubernetes clusters across private data centers and the AWS cloud. The joint Google and Cisco Kubernetes platform for enterprise customers also moved along in 2018.

There were other cloud moves for its own products, such as AppDynamics for Kubernetes, which Cisco said will reduce the time it takes to identify and troubleshoot performance issues across Kubernetes clusters. And the company announced its CloudCenter suite will become a key element of the open, hybrid cloud offering being developed by Cisco and Google and that is expected later this year.

It’s fair to say the company will continue to build on that strategy in a big way in 2019.

“Cisco will be thinking more along the lines of the deal with AWS,” said Tom Nolle, president of CIMI Research. “They need to have a hybrid cloud strategy and to avoid being a cloud provider themselves, or they’ll piss off their potential customers. Hybrid cloud means two things: a cloud partnership with the leading providers and a strong enterprise data-center strategy. Cisco really wants the latter anyway, so I’d look for something more detailed and useful in the private cloud space.”

Cisco Cloud strategy is focusing more on tight software integration, said Sameh Boujelbene, senior director at Dell’Oro. “In general Cisco is trying to dominate, control and increase its stickiness in the [on premises] market from a software perspective, rather than the traditional hardware dominance.”

Cisco could make a key acquisition in the cloud arena, said Brad Casemore, IDC’s research vice president, data-center networks.

“Cisco CEO Chuck Robbins talked about Istio secure, connect and monitor microservices in a day-one keynote at Cisco Live earlier this year, but Cisco lacks many components that could provide added value in the decoupled Istio control and data planes. In many ways, service meshes represent the disaggregation of ADC [application delivery controller]-like functionality into composable and modular software-defined application services for L7 networking and security,” he said.

“I believe Cisco sees the service mesh and Istio as a new opportunity to provide cloud-native networking for containers and microservices. I would not be at all surprised to see Cisco make an acquisition in this space in 2019,” Casemore added.

SD-WAN has arrived

The next big 2019 focus area for Cisco will most certainly be SD-WAN.

Central to its strategy is the continued integration and utilization of the SD-WAN technology it acquired in 2017 when it bought Viptela for $610 million.  The most widely expected news of 2019 will be the full integration of Viptela technology in Cisco’s DNA Center where customers could take advantage of automation capabilities, assurance setting, fabric provisioning and policy-based SD-WAN segmentation from a single location. Last July, Cisco said such integration is in the works but over a year out. That could put the announcement of that integration as early as late July.