Cisco Systems Inc. (CSCO - Free Report) recently announced that it has updated its Application Centric Infrastructure (ACI) with enhanced features. The additions to the company’s software-defined networking (SDN) offerings are aimed at the simplification of network management.
The latest version ACI 3.0 has better security and simpler management process for scalable workloads. This will be compatible with cloud containers, virtual machines and bare metals for on-premise data centers as well as private cloud architecture. Notably, with the growing usage of heterogeneous multi-cloud architecture, this version is anticipated to gain rapid adoption.
Management noted that the upgraded ACI will use automated IT operations and a single central policy for multiple data centers, thereby enabling easy management of workloads by network operators. This, in turn, will assist in the delivery of “ACI Anywhere” across complex cloud environments.
This upgrade along with the company’s acquisition of Viptela indicates its efforts to address the threats related to the SDN market. Shares of Cisco have gained 14.2% year to date, marginally underperforming the industry’s 14.6% rally.
Cisco’s Strategic Initiatives
As a defensive measure to fight against the headwinds of the switching, routing and data center businesses, Cisco is focusing on expansion of data center operations and security market. The launch of Intersight, in an era of hybrid cloud technology advancement, is considered to be a positive. Completion of the acquisition of Springpath is another tailwind.
Cisco recently acquired “Observable Networks”, a provider of cloud-native network forensics security applications delivered as a service. The company’s Stealthwatch Solution is expected to benefit from this addition, thereby ensuring better compliance with the applications on Amazon’s (AMZN - Free Report) Web Services and Microsoft’s (MSFT - Free Report) Azure cloud platforms.
Cisco also collaborated with Telenor for providing a cloud solutions platform, “WorkingGroupTwo” (WG2) for assisting telecom operators in accelerating product innovation and speedy marketing of products, which is expected to boost its top line going ahead. Additionally, extended partnerships with Apple (AAPL - Free Report) , IBM and Microsoft will help it to gain significant traction in the cloud and Internet of Things (IoT) market in the long run.
However, the ongoing transition to subscription-based model will continue to hurt the company’s top line for some time now. The weakness in the service provider business segment and intense competition from the likes of Huawei, Juniper and Arista Networks are the other major concerns for the time being.
Zacks Rank & Key Picks
Cisco currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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