Cisco is accepting the inevitable, as its hardware is becoming (has become?) commoditized. Clearly the value of its brand label switches is dissipating, as white box manufacturers have caught up in price/performance. As the hardware drifts downward into commodity infrastructure, their only option is to move up into software ultrastructure. Hence: Cisco’s Lindt OS, which will run on low-end competitor’s switches, too.
Kevin McLaughlin, Cisco Moving to Break Apart Networking Software from Hardware
Cisco is planning to sell operating system software for networking devices — which switch internet traffic between networks — without requiring customers also buy Cisco’s high-end hardware, said two people familiar with Cisco’s planning. Customers will be able to use Cisco’s cheaper switches that run on chips made by other companies, like Broadcom, rather than Cisco’s specially designed chips. Engineers at Cisco have been working on the standalone version of the operating system which will be called Lindt.
In doing so, Cisco is likely to hurt profit margins on its switches, the company’s largest single business which accounted for over $3.3 billion in revenue in its most recent quarter. The new Lindt operating system will also work on low-end Cisco routers that run on Broadcom chips, said a person close to Cisco. Routers accounted for $1.8 billion in revenue for Cisco in the most recent quarter.
Cisco hopes to use this new option as a way to keep customers from defecting to rivals. Corporate customers, like public cloud providers and cable operators, want to buy cheaper hardware from Asian “white box manufacturers.” And Cisco’s smaller rivals are starting to allow them. Earlier this month, for instance, Arista Networks, a fast-growing maker of switches, announced it would offer a version of its operating system that could run on white box hardware. Juniper Networks, Hewlett Packard Enterprise, and Dell, each of which also make networking gear, have moved in a similar direction.
On last question: How long before the competitors knock off Lindt, too?