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Will Cisco’s Applications Business Continue to Drive Its Revenue?

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Revenue rose 10% in the first three fiscal quarters

Cisco Systems’ (CSCO) Applications business segment consists of revenue from collaborations, analytics, and the IoT (Internet of Things) vertical. In the fiscal first quarter, Cisco’s Applications segment reported revenue of $1.20 billion, a rise of 6% YoY (year-over-year).

Comparatively, its Applications revenue rose 6% in the fiscal second quarter to $1.18 billion and 19% in the fiscal third quarter to $1.31 billion, indicating a rise of 10% YoY in Applications revenue in the first nine months of fiscal 2018.

The Applications business now accounts for over 10% of Cisco’s total revenue. This segment has easily been the fastest-growing one for the company in fiscal 2018.

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Cisco continued to lead the collaboration market at the end of the fourth quarter of 2017

According to data from Synergy Research Group, Cisco led the collaboration market at the end of the fourth quarter of 2017 with a share of ~14%. Cisco’s closest competitor is Microsoft (MSFT) at 13%, while IBM (IBM) and Avaya are other major players.

Cisco’s leadership in the collaboration market can be attributed to its presence in premise-based solutions and its revenue growth in the hosted and cloud vertical. Cisco has a share of over 25% in the premise-based vertical, while Microsoft leads the hosted and cloud vertical. Google (GOOG) accounts for less than 3% of the hosted and cloud vertical.

Acquisitions in this business

Earlier this year, Cisco enhanced its AI and machine learning capabilities by acquiring relationship intelligence company Accompany, which provides insights for the improvement of team meetings and experiences.

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