Cisco Systems, Inc. (CSCO) Earnings Call Transcript & Summary

Hello, everyone. As we all sit, let me thank each and every one of you for joining this call in spite of a busy work schedule. My name is Avinash Salian, and I'm product sales specialist for mobility solutions in Cisco. Joining me today is Drago, EN technical solutions architect for APJC region. In today's session, we will explain how we can take your network to the next level with Cisco's WiFi 6 and ThousandEyes solution. During this session, we will be running a live Q&A. We would request everyone to participate for the same. If you have any questions during the sessions, please do drop a note in the chat section. Our experts will answer them for you. In next 15 minutes, I will take you through the future of wireless solution, which is the sixth generation of WiFi solution called WiFi 6, to add more flexibility and scalability to next-generation applications. I would want to start with a very good quote from Charles Darwin: It is not the strongest of species that survives, nor the most intelligent that survives. It is one that is most adaptable to change. And change is something which is needed, which is the [ need of the hour ] for our current access networks. As you have observed in recent times, there has been a huge proliferation of mobile devices. Predictions are that, by 2023, 43% of workforce will be mobile. Around 71% of total IP traffic will be wireless. The number of connected mobile devices will be more than 13 billion by 2023, and this is going to increase further. The fact is that more and more we are becoming dependent on the network. The biggest trend that we're observing is the advent of new applications which provide immersive application experiences with augmented reality and virtual reality. Every organization, be it health care, manufacturing, education, are implementing augmented reality and virtual reality technologies. The challenge is these technologies require higher bandwidth, bandwidth of up to 25 mbps per application. And hence, the current infrastructure needs to cope with it. The second trend is the addition of IoT devices. More and more of IoT devices are getting added to the network. IoT devices need better battery life, and with current networks, it's difficult to maintain the battery of these devices. And most importantly, everyone today is looking for a network which can provide speeds like 5G indoors. And hence, it becomes very important for us to look at a mobility solution which is completely a different way, a solution which gives you the next generation of access. The answer to this is WiFi 6, the sixth generation of wireless network. WiFi 6 standard is a direct result of the growing demands of accessing newer applications with better speeds. WiFi 6 is offering multi-gigabit performance which is almost 4x the throughput which you get with current WiFi 5 generation solutions, and thus it results in increased network capacity. However, it is much more than speeds [ and feeds ] that we are looking at today. With increasing channels and ability to transmit and receive across multiple clients at the same time, IoT -- or IoT devices, rather, can easily connect with more reliable connection at scale to the WiFi 6 network. With WiFi 6, there are significant battery savings which we can achieve. It's in a range of 3x to 4x more power efficient. As a result, WiFi 6 will significantly faster be adopted in the current environment. WiFi 6 has changed the way users access the network across different verticals. For example, WiFi 4, [ a dot-level end standard ], students were able to connect with their own devices. It was more which we call as BYOD. WiFi 6 has taken this to the next level by enabling innovative ways of immersive learning with applications like augmented reality and virtual reality. What started as a basic Internet access for patients and staff in health care has now advanced to network for telemedicines, mobile health with digital and imaging and communications. WiFi 6 has provided the means to access 4K video conferencing applications in enterprises, 8K video streamings over a WiFi network; and it's made it a reality. WiFi 6 truly has paved the way for next generation of wireless access. WiFi 6 comes with the promise of quality. If you look at previous generations of WiFi: For example, WiFi 4 actually brought in the convenience of access. WiFi 5 enhanced the network experience to the next level and gave sufficient connections for the devices to connect to network, whereas WiFi 6 completely changes the game by providing an experience which is closest to the wired network. WiFi 6 today delivers what it promises by providing higher capacity, more density and better performance to connect low-latency applications across different verticals. In education, WiFi 6 makes learning and digital education a reality with augmented reality and virtual reality kind of applications. Because of battery life enhancements for IoT devices, you can now connect smart IoT devices, wearables, et cetera, to your health care network. We can build a true smart campus where employees can collaborate with each other using digital collaboration tools like video conferencing, digital white boards, et cetera which can connect over a very high-reliable WiFi 6 network. We can now build a self-service [ retail ] network as well as an augmented and digitized manufacturing unit using the benefits provided by WiFi 6 standards. Even wireless access in a densely populated place like a public venue has now become possible with high-density and reliable WiFi 6 networks. In Cisco, we have taken the benefits of WiFi 6 to the next level by introducing next-generation always-on wireless line network with help of controllers and access points which are purpose built to handle higher throughputs, solution which is built for enabling a software-defined network with common policy and segmentation for wired and wireless. We have introduced innovative technologies like RF ASIC, which is an RF unified engine which improves the scanning efficiency of RF bands to provide efficient real-time analytics. We have added some key wireless intelligence [ all to the ] solutions like device analytics, RF analytics and location analytics. Cisco has built some strong partnerships with key ecosystems to provide improved user experience and device analytics. Cisco has now introduced purpose-built access points to be deployed depending on your network needs. Catalyst 9105 and 9115 Access Points are built for small to medium-sized deployments, whereas the industry-leading Catalyst 9120 and 9130 Access Points, powered by Cisco's RF ASIC and dual 5 gigahertz [ functionalities ] are built for mission-critical and best-in-class networks. Cisco's next-generation wireless stack provides a resilient, secure and intelligent network with Catalyst 9100 Access Points and IOS XE-based Catalyst 9800 controllers. The entire solution can be managed by Cisco's DNA Center, which translates the entire business intent to network policy and captures actionable insights. Further, the entire network is digitized by Cisco's DNA Spaces solution, which is a powerful end-to-end indoor location services and cloud platform that provides wireless customers with rich location-based services, including location analytics, business insights, customer experience management and asset tracking. This brings me to the end of my section. Hope the session was fruitful and it provided you more insights and relevance into the need of WiFi 6 in today's world. I will hand over now to my colleague Drago, who will take you through the ThousandEyes solution, which provides an end-to-end view to digital delivery of applications and services over the Internet.

Thanks, Avinash. And thank you, folks, for attending this session. I -- my name is Drago Sijan. And I'd like to spend the next little while talking to you about Cisco's ThousandEyes platform and more specifically some of the recent additions that we've released regarding the enterprise agent and support for the enterprise agent on the catalyst 9K family of switches. Before I dive into detail on that, I'd like to, I guess, share a little bit more background info just to get everyone on the same page with ThousandEyes. And also just a little bit of housekeeping: There is a live Q&A session, with some lovely folks standing by to take your questions and answer with any additional information or clarifying any points that I may have missed, et cetera, so just please post your questions in the Q&A panel. With that, just a bit of background on ThousandEyes and the underlying principles of the ThousandEyes platform. ThousandEyes leverages agents distributed across the globe, literally, in service provider networks, in customers' enterprise environments, on end points, on end point machines on customers' laptops and desktops, et cetera, in the cloud environment, in the virtual environment; and collects metrics and data from those end point agents to essentially paint a visibility picture of the network. And the 3 core tenets or 3 core principles around ThousandEyes are, firstly, network visibility, true end-to-end network visibility, including the networks that traditionally we don't own and have been opaque to us such as service provider networks. Service provider networks, we know traffic goes in and goes out, but we -- in the past, we haven't really been able to get a handle on what happens hop by hop in those networks. ThousandEyes and the cloud agents give us a much more detailed view, as you'll see, in those service provider networks; and then combines that with agents sitting in campus, in customers' campus environments, et cetera to build a complete picture. The other key principle of ThousandEyes is vantage points and the application experience looking from different perspectives. The traditional way of looking at network performance is perhaps looking from my end point to the end application, whether it's in a data center or whether it's in a cloud. So it's a single perspective, if you like. However, if I was to have multiple vantage points or have the ability to have multiple vantage points where I can see that traffic or similar traffic traversing different bits of that path through different starting points and ending points, you can see how you can sort of triangulate and determine where bottlenecks are, where choke points are, et cetera in that end-to-end flow. Simply looking at it from one vantage point perhaps gives us a limited view, but the multiple vantage points allows us to build a much more detailed picture. I guess the example I'd like to use is GPS satellites, for instance. You know that it takes 3 satellites or the ability to see 3 satellites from your GPS receiver or your iPhone to locate, to give you a 2D location. You triangulate and that's your X, Y coordinate, if you like. Or -- and it takes 4 satellites to give you altitude as well. So that's the sort of the analogy to vantage points. The more vantage points you have, the more accuracy you have to see where some of those bottlenecks and choke points are. And the third key principle of ThousandEyes is taking all this information that's provided by the agents and time correlating it so that we have a common time reference across all that data and all that visibility and all that insight information that we've got. So we can actually look at the low-level routing information, the path information, the high-level application response time, et cetera all at the same time point to determine where -- once again where particular issues are or what the particular issues could be, whether they are a low-level network issue or a -- or simply an application response time issue, based on the fact that we can see all of those things at the same time. And I guess, as I mentioned, ThousandEyes leverages these agents to measure performance from across the globe, I guess. And just to reiterate, it comprises of 3 different types of agents: cloud agents that are located in service providers infrastructure and the Internet, I guess, other -- outside of our network. So they provide us an outside-looking-in view of network performance. Enterprise agents that are positioned in our infrastructure, in the customer's infrastructure. So they sit on routers, et cetera, and they provide us more of an inside-out-looking view of network performance. And then lastly, end point agents that are positioned on end points on desktop, laptop machines, et cetera that give us that sort of end-to-end, "from user to end application" view. And each agent has a rich repertoire. Each agent has the ability to perform a whole bunch of different synthetic tests to measure network performance, whether it's low-level or high-level application performance. So those tests include something as low as path trace or BGP-level monitoring, all the way up to application simulation and application-level monitoring. So it's a range of tests that can be configured on each agent and time correlated so that every agent has the same, I guess, clock running. And we can correlate all this data across tens of thousands of agents across the globe. So that takes us to the core of the topic, I guess, if you like. ThousandEyes now supports the enterprise agent on Catalyst 9000 switches and specifically the cat 9300 and 9400 platforms. This sort of new or additional agent support gives us a more detailed view into our networks and our applications without necessarily going to the extent [ than ] the extra work of deploying end point agents [ on all our ] end points. So we can deploy enterprise agents on key switches in our access infrastructure perhaps to give us a view from branch to cloud application or remote office to data center application, et cetera. So I guess in the first instance it's faster time to value. We can deploy ThousandEyes agents fairly quickly on switches and giving us a much deeper end-to-end view than perhaps relying on agents that are located further up the chain and not giving us as a detailed view; and not as much work as deploying agents on end points, which will take a bit more of an effort. It leverages existing switches in our infrastructure or new switches that we're about to deploy, but most importantly, it's included in the DNA Advantage and Premier licensing of the cat 9K switches, so it's notionally free. Now it's enabled with all Catalyst 9300, 9400 switches that are shipping now and required for those -- and it's also supported on existing switches that are in customers' networks, with the requirement that they'd be running IOS 17.3 or IOS 17.5. So it's there's a minimum IOS that these agents have been bundled with or implemented with. And also importantly is that the agents are lightweight. So on the cat 9K, we have the ability to run third-party apps. And those third-party apps can be a Docker application running out of SSD. Or in this case, the agents are light enough to be -- to run out of memory, so they don't require the solid-state disk and the additional infrastructure to run. They run completely out of memory, but as I mentioned, the licensing is included, so no additional licensing. The only caveat is that agents support the majority of the ThousandEyes synthetic tests, with the exception of the most complex 2 tests that require additional onboard storage in the switch, et cetera for synthetic data and data storage. And they require an SSD to be added to run those tests, but the rest of the suite of tests are completely supported out of memory. The other point is that they're also pooled. The licensing can be pooled across the entire fleet of switches. So I guess the question I often get is should I run this on every switch in my network. Well, the answer is typically no. It depends on the sort of tests that you're running and how often those tests run. Will they run every short period of time or every long period of time? And what would be the value of running the same test on every switch in a stack perhaps, when we can actually pool the license credits and run more tests on the one switch perhaps in that particular location? And as a rule of thumb, the default DNA license provides the ability to run one test every 5 minutes or so forever, I guess, continuously. Without getting into too much detail on how the licensing and license credit works, but essentially that one test per 5 minutes equates to a pool of license points, a bucket of license points, if you like, for every switch. And every test that runs on that switch consumes a small number of those license units. That bucket is replenished every month, and as you run the tests, a small number of tokens are taken out of the bucket. So running one test every 5 minutes would give -- you would have enough tokens in the bucket to do that every month continuously, I guess, but if you needed to run more tests, you could pool the resources from the other switch or pull the tokens from the other switches in your network and run that, I guess, more frequently or more tests on that one platform. The other thing that also comes along with this is the management and the operational -- operations console for ThousandEyes. So you have full access to that and visibility of every other enterprise agent that you may have in your network. So I guess, in summary: It's bundled with the cat 9K platforms in the current releases or the latest releases of IOS. And where you might be running an older release of IOS, you'll need to upgrade, but you can -- it's supported on all your platforms, all your cat 9K switches that are -- that have a DNA Advantage or Premier license. And integration with DNA Center is -- really gives us the ability to deploy and orchestrate and configure these agents in our switching fleet, if you like. So it's a few clicks to orchestrate and deploy this rather than resorting to command-line and downloading IOS upgrades and, I guess, the manual way of applying these or configuring these agents and upgrading the software. So DNA Center gives us a very automated and simple way of deploying this in our environment. To summarize. I guess, as I said at the beginning, the key ThousandEyes tenets were around visibility. Now we have not only visibility into the opaque networks and some of our campus environments, but essentially we have much greater visibility into all of the networks that our traffic and applications traverse, and supported on the -- on existing and future cat 9Ks that -- deploying in your network. The enterprise agent is the same enterprise agent as every other platform that you may have used ThousandEyes on that has an enterprise agent, so it's manageable from the same console in the same way with the same suite of tests. And it's included in the DNA licensing, the DNA Advantage and Premier licensing for the cat 9K switches. So once again, the key tenet is multiple vantage points gives us much deeper visibility and deeper insights. And with the cat 9K enterprise agent, we really add to that and have even deeper end-to-end visibility of our networks and the traffic traversing those networks to give us, I guess, insights into how our network and applications are performing. With that, I thank you. And please do use the Q&A panel to ask any additional questions.