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How Did Cisco’s Data Center Segment Perform in Fiscal 4Q16?

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Data center revenues fell 1% YoY

Cisco System’s (CSCO) data center business revenues fell 1% YoY (year-over-year) in fiscal 4Q16. Revenues in this segment fell from $882 million in fiscal 4Q15 to $873 million in fiscal 4Q16. Its next generation data center portfolio is expected to meet customer needs, enabling public, private, or hybrid cloud deployments.

Charles Robbins, Cisco’s chief executive officer, said, “Over the past year, we have continued to invest heavily in our data center portfolio, building upon our core networking foundation as customers look to Cisco for an open, programmable and automated infrastructure that accelerates application deployments and provides network services in an agile way.”

Cisco’s ACI (Application Centric Infrastructure) products grew 36% in fiscal 4Q16 at an annualized run rate of $2.3 billion. In fiscal 3Q16, revenues from Cisco’s ACI platform increased 100%. Cisco has also delivered technologies across a number of physical, virtual, and cloud-based deployments.

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Market leaders in the data center segment

According to a research report from Synergy Research Group, Hewlett Packard Enterprise (HPE), Cisco, and Microsoft (MSFT) continue to lead in enterprise data center hardware, service provider data center hardware, and data center software, respectively.

Data center infrastructure consists of enterprise data center hardware, data center software, and service provider data center hardware. While HPE is a leader in the enterprise data center hardware space with a share of more than 20%, Cisco leads the service provider data center hardware market with a share of 12%.

The data center software business is the smallest of the three businesses and is largely dominated by Microsoft (MSFT) with a share of almost 70%. VMWare (VMW) is another company competing in this space, with a share of 18%.

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