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How Cisco’s Data Center Business Performed in Fiscal 2Q17

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Feb. 23 2017, Updated 7:37 a.m. ET

Data center revenue fell 4% YoY

Cisco Systems’ (CSCO) Data Center business revenue fell 4% YoY (year-over-year) in fiscal 2Q17. Revenue in this segment fell from $820 million in fiscal 2Q16 to $790 million in fiscal 2Q17. 

Cisco’s next-generation data center portfolio is expected to enable public, private, and hybrid cloud deployments. Cisco is aiming to become a market leader in the data center space and provide world-class private and hybrid cloud solutions to enterprises.

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Cisco’s ACI (Application Centric Infrastructure) product revenue rose 28% in fiscal 2Q17, driven by a rise in customer traction. This rise included new 1,300 Nexus 9000 customers and 450 new ACI customers in fiscal 2Q17. Cisco is also determined to offer end-to-end visibility and security in the 100-gigabyte network infrastructure space.

US leads the data center market

Data center infrastructure consists of enterprise data center hardware, data center software, and service provider data center hardware. While Hewlett-Packard Enterprise (HPE) is a leader in the enterprise data center hardware space with a share of over 20%, Cisco leads the service provider data center hardware market with a share of ~12%.

According to a research report by Synergy Research Group, the United States (SPY) accounts for 45% of major cloud and Internet data center sites, followed by China and Japan at 8% and 7%, respectively. Amazon Web Services (AMZN), Microsoft (MSFT), and IBM (IBM) are the companies with the largest data center footprints.

Synergy’s research report states, “Google and Oracle also have a notably broad data center presence. The remaining firms tend to have their data centers focused primarily in either the US (Apple, Twitter, Salesforce, Facebook, eBay, LinkedIn, Yahoo) or China (Tencent, Baidu).”

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