Internet for the Future - Jonathan Davidson EVP/GM Mass-Scale Infrastructure Group (MIG)
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Internet for the Future Jonathan Davidson EVP/GM • Mass-Scale Infrastructure Group (MIG)
Forward-looking Statements This presentation contains projections and other forward-looking statements regarding future events or the future financial performance of Cisco, including future operating results. These projections and statements are only predictions. Actual events or results may differ materially from those in the projections or other forward-looking statements. Please see Cisco’s filings with the SEC, including its most recent filing on Form 10-K, for a discussion of important risk factors that could cause actual events or results to differ materially from those in the projections or other forward-looking statements. GAAP Reconciliation During this presentation references to financial measures of Cisco will include references to non- GAAP financial measures. Cisco provides a reconciliation between GAAP and non-GAAP financial information on the Cisco Investor Relations website https://investor.cisco.com/financial- information/financial-results/default.aspx © 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 2
The Internet Adding $13T * to equity market
capitalizations globally
is the Backbone
Internet traffic spiked 25% to 45%*
for Economies, around the globe during the Pandemic
Industry, and Internet traffic continues to
Daily Life grow at a rate of 35%*annually
ARK Investment Management LLC, 2020 from World Federation of Exchanges, "H1 2020 Market Highlights", Aug 2020
Cisco data pulled from peering traffic points around the globe, Mar 2020
Cisco Annual Internet Report, 2018
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 3August 2020
Salinas, California
60 miles south
3+ billion people of San Jose
with very limited or
The NO broadband access
Digital 29 countries
with affordable broadband
Divide $6.7 trillion
added to global economy
by connecting the unconnected
Sources: World Economic Forum, 2020, Cisco, “The Role of Technology in Empowering an Inclusive Future 2020;
“Global Internet Inclusion Could Lift 500M out of Poverty, and Add Over $6TRN to Global GDP,” PwC, May 16, 2016
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 4Current Economics Are Beginning to Break
890 Mbps
$5for each $1 of CAPEX
OPEX
Today
Internet
Traffic Growth
2006 2010 2014 2018 2022
Sources: IHS Technology, “Service Provider CapEx, OpEx, Revenue, and Subscribers Database”
Cisco 2018 Visual Networking Index (VNI)
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 5Service Provider Business
double digit growth y/y
Momentum
Webscale Business
>160% order growth y/y
is Building Trailing Four Quarter Basis
>80% total order growth y/y
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 6Growth Opportunity
$14B
Expansion
Private 5G
$36B
•
• Carrier Edge
• Hyperscalers
• Components
Current
• Routing
• Optical
• Cable
• Public 4G/5G
• Mobile IoT
• Automation
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 7Innovation to Transform Networking
Silicon Optics
Software Systems
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 8A World Class Portfolio for the Next Decade
Cisco Silicon One Cisco 8000 Series
10 devices >2X more density and >3X more
3.2T to 25.6T power efficient than the competition
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 9Routed Optical Networking
Routing
OTN
Optical
Routed Optical Network
CapEx OpEx TCO
35% Savings*
57% Savings*
46% Savings*
* Source: ACG Research, 2021
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 10Shifting Optical TAM to Routing TAM
Transponders, Routed Optical
ROADMs, and OTN Networking
$17B $10B
Optical TAM IP Routing TAM
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 11The Twilight of Transponders
ROADM
SR Optic Fiber Jumper SR Optic Transponder LR Optic Fiber Jumper
Router
Phase 1
ROADM
ZR/ZR+ Optic Fiber Jumper
Router
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 12Shifting Billions in Optical TAM to Routing TAM
Today Over Time Going Forward
Integrate Replace ROADM Converge private
transponders with router line services
and enable
multi-vendor
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 13“Colt is committed to ensuring its network is
at the forefront of technological innovation,
and this latest investment is the next step in
our network optimization strategy, as we
continue to leverage next-generation
optical and packet technologies.”
Vivek Gaur
Vice President, Network Engineering
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 1410.3
6.1
Billions $US
6 of the Top 14.0%
Hyperscalers
generate half of all 2021 2025
internet traffic in the Hyperscaler Data Center
United States Networking Spend
Source: Dell’Oro Group
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 15Flexible Purchasing Models
Silicon and Optics Software-Only Systems-Only Integrated Systems
Components
Silicon and optics Cisco IOS XR Cisco hardware Complete router or
components to build flexibly runs on both that runs 3rd party switch with Cisco
3rd party systems Cisco routers and operating system silicon, optics,
switches as well as software software, and
3rd party systems hardware
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 16Of the Top 6 Global
Webscale Companies...
4 Hyperscalers
Strong Use Cisco Silicon One and Cisco 8000 systems
Hyperscaler
2 Hyperscalers
Use Cisco 8000 and Cisco Silicon One with
their own choice of OS
Traction 2 Hyperscalers
Use Cisco Silicon One on a component level
3 Hyperscalers
Use at least two of the flexible consumption
models simultaneously
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 172.0
Billions $US
21.4%
White Box 0.79
Opportunities
2015 2020
IOS XR
Components | Disaggregation Data Center Whitebox Spend
Source: Dell’Oro Group
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 18“Cisco’s latest innovation across silicon and
optics offers us expanded options to
provide our customers a high-powered
private data center experience at low cost.”
Dave Maltz
Technical Fellow, Corporate Vice President
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 195G and IoT Opportunity
5G Mobile Subscribers Cellular IoT Connections
3
3.5
53% 12%
Billions
Billions
2.2
.55
2021 2025 2021 2025
Sources: GSMA Intelligence, “IoT Connections Forecast”, May 2020
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential Omdia, “5G Mobile and Fixed Subscription Forecast”, 202020Mobile IoT Services
High Value Private 5G Networks
5G Monetization
Fixed Wireless Access
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 21Growing 2x faster than industry
5G IoT #1 in Connected Car
Control Center 50+ Communication Service Providers
82 Countries
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 22“Working with Cisco, we continue to help businesses
deploy IoT devices and applications faster and more
securely and get more value out of devices they use.
This is an important first step toward the IoT massive
connectivity that will eventually create opportunities
for enterprises to realize the full potential of IoT.”
William Stovall
Vice President, Mobility, IoT and 5G
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 23Private 5G and WiFi-6 Opportunity
Wi-Fi 6 Private 5G
Focused Broad
Hospitality Industrial Healthcare Manufacturing Retail
Coverage Coverage
Device Ultra-Low
Logistics &
Availability Education Finance Agriculture Entertainment Latency
Transportation
IT
Reliability
Familiar Venues Energy Consumers Cities Enterprise
© 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 24Transformative Cross-Domain Flexible Models to Innovation to Redefine Leadership to Help Provide Quality and Economics Grow New Revenue Choice Cisco Silicon One and Optics Private 5G and WiFi-6 Components Routed Optical Networking Fixed Wireless Access Software-Only Public 5G Mobile IoT System-Only Automation Carrier Edge Integrated Systems © 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 25
Forward-looking Statements These presentation slides and related webcast may be deemed to contain forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward -looking statements include, among other things, statements regarding future events ( such as statements regarding our growth and strategy) and the future financial performance of Cisco that involve r isks and u ncertainties. Readers are ca utioned that these forward-looking statements a re only predictions a nd may differ materially from actual future events or r esults due to a variety of fa ctors, including: the impact of the COVID-19 pandemic a nd r elated public health measures; business and economic conditions a nd growth trends in the networking industry, our customer markets and various geographic r egions; global economic conditions a nd uncertainties in the geopolitical environment; over all information technology spending; the growth a nd evolution of the Internet a nd levels of capital spending on Internet-based systems; variations in customer demand for products and services, including sales to the service provider market a nd other customer markets; the return on our investments in cer tain priorities, key growth areas, and in certain geographical locations, a s well a s maintaining leadership in infrastruct ure platforms and services; the timing of orders and manufacturing and customer lead times; changes in customer order patterns or customer mix; insufficient, excess or obsolete inventory; variability of component costs; variations in sales channels, product costs or mix of products sold; our ability t o successfully acquire businesses a nd technologies and to successfully integrate a nd operate these acquired businesses a nd technologies; our ability to achieve expected benefits of our pa r tnerships; increased competition in our product a nd service markets, including the data center market; dependence on the i ntroduction and market a cceptance of new product offerings and standards; r apid technological a nd market change; manufacturing and sourcing risks; p roduct defects a nd r eturns; litigation involving patents, other intellectual property, antitrust, stockholder and other matters, and governmenta l investigations; our ability to a chieve the benefits of restructurings a nd possible changes in the size and timing of r elated charges; cyber -attacks, data breaches or malware; vulnerabilities and critical security defects; terrorism; natural catastrophic events; any other pandemic or epidemic; our ab ility to achieve the benefits a nticipated from our investments in sales, engineering, service, marketing a nd manufacturing a ctivities; our ability to recru it and retain key personnel; our a bility to manage financial r isk, a nd to manage expenses during economic downturns; risks related to the global nature of our operations, including our oper ations in emerging markets; currency fluctuations and other international factors; changes in provision for income taxes, including changes in tax laws a nd r egulations or a dverse outcomes resulting from examinations of our income tax r eturns; potential volatility in operating results; a nd other factors listed in Cisco’s most recent report on Form 10-K. The financial information contained in these presentation slides a nd related webcast should be r ead in conjunction with the consolidated financial statements a nd notes thereto included in Cisco’s most r ecent r eport on Form 10 -K, as it may be amended from time to time. Cisco’s r esults of operations for prior periods a re not necessarily indicative of Cisco’s operating results for any future periods. Any projections in these presentation slides and related webcast are based on limited information currently available to Cisco, which is subj ect to change. Although a ny such projections a nd the factors influencing them will likely change, Cisco will not necessarily update the information, sinc e Cisco will only provide guida nce a t certain points during the year. Such information speaks only as of the date of these presentation slides and rela ted webcast. © 2021 Cisco and/or its affiliates. All rights reserved. Cisco Confidential 26
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