Cisco Systems' Management Host Conference On Service Provider Routing Business (Transcript)

Cisco Systems, Inc. (CSCO)

Conference on Service Provider Routing Business

April 13, 2012 11:00 am ET


Marilyn Mora -

Surya Panditi -

Suraj Shetty -


Marilyn Mora

Hello, everyone, and welcome to Cisco's conference call focused on our service provider routing business. This is Marilyn Mora of Cisco's Investor Relations team. I'd like to thank all of you for joining today's call.

Today's discussion will focus specifically on Cisco's service provider routing and optical strategy to sustain market leadership through innovation and architectural approach. Now on to the format of our call today. It will include a 20- to 25-minute presentation followed by an opportunity for Q&A.

At this time, I'd like to introduce you to our speakers, who many of you know and have met. First, Surya Panditi, Senior Vice President and General Manager of Cisco's service provider business and a 7-year veteran of Cisco. He is responsible for the strategy, engineering and marketing direction of Cisco's comprehensive family of service provider networking platforms, including core and edge routing. Welcome, Surya.

Surya Panditi

Thanks, Marilyn.

Marilyn Mora

Our next speaker is Suraj Shetty, Vice President of Worldwide Service Provider Marketing and a 15-year veteran of the company. Suraj's responsibilities include leading the company's products and solution marketing function in video, emerging technologies and solutions, cloud, mobility and routing for the service provider and enterprise sectors globally. In addition, he is a member of Cisco's service provider business counsel. Welcome, Suraj.

Suraj Shetty

Thanks, Marilyn.

Marilyn Mora

Now I like to remind the audience that today's call will pertain strictly to Cisco's service provider routing and optical strategy. No new financial information regarding Cisco's overall performance is intended or implied, and is cautioned not be viewed as an update to the quarter.

We may make forward-looking statements regarding our service provider business, which are subject to risks and uncertainties outlined in detail in our documents filed with the SEC, specifically, the most recent report on Form 10-K and 10-Q. Actual results may differ from statements made today. So Suraj, let's go ahead and get started. I'll turn it over to you.

Suraj Shetty

Thanks, Marilyn. And let me kick it off out here with our latest love affair, which is our new iPad. I don't know if many of you have realized it or not, but with just upgrading your tablet from the iPad 2 to the new iPad with retina display, it's any video stream that it can get on this new iPad can be about 2 megabits per second. Just as a comparison, that's 3x higher than the previous iPad 2, which lasted for just a year. What you can see right now is just one tablet having such an amazing impact on the network itself. And when you go and look at what's happening every year, iPad -- next year there'll be another new iPad, new iPhone, new set of devices coming up, which will need more and more bandwidth. Just think about the same video Netflix stream that you saw. It will need more bandwidth and of course, you get a much better quality. And there will be more applications coming like that, which will drive more need for more devices and more bandwidth.

This cycle continues to speed up, and thanks to the tablets and the smartphones, we continue to see a major impact on the netbook. How big is it? Let's look at that. One of the things that my team has done is we do this visual networking index, many of you probably are familiar with. And the reason we do this is just to track this massive change that's happening in the marketplace driven by the tablets and the smartphones.

When you look at it over next 5 years, we'll have a zettabyte of data. It's a 299% growth. What's even more important is how this is going across the board, whether it's a video, mobility and cloud. These are the 3 major trends that's driving it. 90% of the traffic is going to be video all the time. iPad doesn't even have a landline connection or a wired connection. And when you look at it, all that services are coming from the cloud. So this is having a massive impact, and this has to go over an IT infrastructure.

And when you look at the network infrastructure, 10 years ago, it's very simple. You download it, you had a web browser, you got -- went to the Internet and there was an IP core, there was an IP edge and access the apps, it could be wired or wireless. And you got it all with these devices.

Now as the data centers have proliferated, as web tool continue to drive increase, as optical became more and more -- became the connection point between these data centers along with the routing, there is a major trends that's going on. Two things. The traffic is not just -- not south as you saw before. It was more about -- it was more -- now it's more east-west also. What does that mean? There is a lot of content getting replicated between data centers from the data center to the user and especially driven by video as one of the major applications.

So what you see here is number one, you probably have heard a lot of things saying, "Oh, why do you need routing when it's all going from point A to point B?" That's actually not true. And as this picture can tell you, as the applications in the cloud proliferates over time, the traffic path is more undeterministic [ph]. The other trend is the IP plus optic. There is the other question that you've asked us many times. Is optical going to grow? Is IP going to grow as this traffic grows? And what Surya will talk about is how does this IP plus optical come together. And since we have a strong base, both in routing and optical, Surya will talk about how we plan to work on this major transition.

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