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Cisco Wants to Offer Complete Networking Solutions to Customers

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Jan. 21 2016, Updated 12:04 a.m. ET

Enhancement of network security to curb open architecture networking

Cisco Systems (CSCO) is looking to enhance its network security features. It wants to attract enterprise and service provider customers and convince them to use the company’s proprietary products instead of open architecture network solutions.

Its main focus is to offer its clients complete networking solutions, including hardware and software. In the graph below, we can see that Cisco’s revenues increased by 7% in this segment YoY (year-over-year) in 1Q16.

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Networking solutions will help increase router and switch sales

Cisco’s networking solutions will help it bundle its proprietary offering and thus enhance its software segment. This could lead to an increase in its switch and router sales. This will also help Cisco stem the decline in market share in these segments.

Cisco will also benefit from an increase in cybersecurity breaches. This has become an area of extreme concern for retail and enterprise users. The exponential growth in the IoT (Internet of Things) space will differentiate Cisco and peer companies with respect to cybersecurity. According to analysts, Cisco is on track to offer a diverse product portfolio that will help the company generate higher revenues.

Cisco constitutes 3.7% of the PureFunds ISE Cyber Security ETF (HACK). Peers such as Palo Alto Networks (PANW) and Juniper Networks (JNPR) constitute 4.5% and 3.9% of the ETF, respectively.

Cisco constitutes 8.7% of the iShares North American Tech-Multimedia Networking ETF (IGN).

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