Cisco Systems 2025, How to Break the Ice?

In today's ever-changing technology, even Cisco Systems, the networking giant, is facing unprecedented challenges. In 2024, the pace of technology product launches at Cisco Systems was somewhat slow, and there were no major updates to the core network portfolio, which may have contributed to the 23% drop in network revenue in the most recent quarter.
Since its founding in 1984, Cisco Systems has flourished in the networking world. At the time, enterprises mostly preferred network architectures provided by computer vendors. The "minicomputer revolution" of the 1980s broke IBM's monopoly on the IT industry, but proprietary mesh technology has become a new potential obstacle. Cisco Systems' first product, the NIC for DEC minicomputers, was successful largely because IBM's network architecture was an expensive and closed network model that did not fit the more open, Internet-centric model. At that time, enterprises have applications, there is information, the need is the Volkswagen connection.


What do I need now? That's the question Cisco Systems will have to answer in 2025.

What did 2024 do?
In 2024, Cisco invested more in AI network products and further deepened its cooperation with Nvidia. The Cisco Systems C885A M8 server is based on Nvidia's HGX supercomputing platform and includes eight Nvidia H100 or H200 TensorCore GPU or 8 AMD MI300X OAM GPUs Accelerators, and each GPU is equipped with a NVIDIA ConnectX-7 NIC or BlueField-3 SuperNIC, allowing customers to run AI model training workloads on top of server clusters.
Among the few hardware-related upgrades, Cisco beefed up its Nexus 9000 data center switch line with the introduction of the new 9364E-SG2 switch, which has high-density 800G aggregation capabilities。The Nexus 9000 series is a core component of Cisco's enterprise AI strategy, providing congestion management and flow control algorithms, as well as telemetry, to meet the design requirements of AI/ML architectures.
On the software side , Cisco completed its $ 28 billion acquisition of Splunk and began integrating Splunk 's technology into its AppDynamics portfolio to help IT teams unify visibility and improve performance troubleshooting across on-premises and cloud environments .
In security, Cisco released Hypershield, an AI-based self-upgrading security fabric designed to protect distributed applications, devices, and data。Hypershield consists of AI-based software, virtual machines, and other technologies that will eventually be integrated into network components such as switches, routers, and servers.Cisco says it enables organizations to autonomously segment their networks in the event of a threat, gain rapid vulnerability protection without patching or reconfiguring firewalls, and automatically update software without disrupting computing resources.

What to Do in 2025?
Looking ahead, Cisco faces a series of mission-critical challenges。Industry watchers say, the re-focusing on corporate networks is a top priority, while the development of security technology still needs to continue as a priority.
Brandon Butler, senior research manager of enterprise networks at IDC:“The year 2025 will be a pivotal one for Cisco Systems. While executing ambitious internal changes, Cisco is also seeking AI-driven opportunities in the external market.”
Leadership restructuring will play a role in this process. In August 2024, Cisco Systems announced plans to restructure its network, security, and collaboration business units, eliminating 7% of its global workforce, and appointing Jeetu Patel as chief product officer. In addition, the integration of the data center network and security team, the continued integration of Splunk in the product portfolio, and the performance of the campus, branch, collaboration and IoT business unit of the new leadership, will be important factors affecting the future of Cisco Systems.
Cisco Systems also needs to press ahead with its Meraki campus network project to streamline its product portfolio and increase enterprise scalability. Rivals like Juniper's Mist and Marvis, Extreme Platform ONE, and startups Nile and Meter show that there is a strong demand for simplified, integrated network and security solutions and flexible consumption patterns.

Trends in Network Spending
At present, the spending environment of the entire network market is very severe.
"Among existing companies, Cisco Systems is the most exposed to the pressures of network spending," said Tom Nolle, founder and chief analyst at Andover Intel. For two decades, enterprise network equipment budgets have grown at roughly the same rate as inflation, while the number of new projects that could add to their budgets has declined each year. The only area showing growth is security.
Futurum Group research director Ron Westfall also noted in the research report that Cisco Systems' network division, a core pillar of the product portfolio, faced significant challenges in the first quarter of fiscal 2025, with revenue falling 23% from a year earlier.
This data not only reflects the plight of Cisco itself but also highlights the shift in the focus of corporate spending . Companies are shifting budgets away from traditional network solutions to higher-priority technology areas such as AI and cybersecurity . This shows that Cisco must keep up with industry trends , seize emerging opportunities as a priority , and update traditional products to meet the changes brought about by the enterprise cloud priority strategy , so as to solidify its position in the core market segment .

Cisco's AI network prospects
Although AI is still in its early stages, Cisco must continue to think about how to better utilize this trend.
Cisco has identified three focus areas for its AI strategy: AI training infrastructure for hyperscale enterprises；AI connectivity to support AI workloads;And AI inference, or build a private AI cloud for your enterprise.
 
The rapid development of AI infrastructure brings both opportunities and challenges.
Arista expanded AI deployment through partnerships with Meta and Microsoft Azure cloud data centers; Partner and competitor Avida's Spectrum-X family also supports xAI's Colossus supercomputer cluster. Cisco Systems must accelerate the adoption of data center assets such as its 8000-series routers, Nexus 9000 switches and the Silicon One chipset. However, with the promotion of new data centers around the world, the deployment of AI-driven data center interconnection has surged, which has brought growth potential to Cisco's Acacia products.
However, Tom Nolle is pessimistic about Cisco's AI network prospects. He believes that the "AI network" is essentially a fast data center network, and Cisco's role in this field is limited because the development speed of this field depends on how many enterprises independently host AI. The current dominant players are manufacturers such as HPE, IBM, and Broadcom, not network vendors. Because the current demand is to build an internal-hosted AI, only after achieving this should the network be considered.
For Nolle, areas like parks, and competitors like Arista, are lucrative markets. Cisco Systems needs to try not to lose too much in these areas, but these markets are not profitable enough to really help them, so there is no need to focus on niche tasks or competitors.

The main competitive threats to Cisco Systems come from HPE / Juniper, Ericsson and Nokia.
HPE / Juniper is closer to the application layer . In the current IT world , any new spending must come from new revenue , and new revenue can only come from new applications . Both Ericsson and Nokia are entering the data center space，And the data center is the only big and capital-intensive area in the enterprise network, and both companies are working on real-time applications and the Internet of Things, a strategic application task that challenges Cisco.
In 2025, Cisco Systems stands at the crossroads of change, challenges and opportunities. The industry is waiting to see if it can break out of its tight encirclement and restore its glory.