Cisco abandons direct sales

Networking giant Cisco said it will move away from direct sales by the end of 2020 and export its entire product portfolio on a subscription basis.

The outfit claims it will make cost savings of $1 billion per year, including its core networking hardware portfolio.

The company said it  will accelerate its transition of the majority of its portfolio to an ‘as a service’ distribution model, with a view to shifting the majority of its products away from direct sales by the end of the calendar year.

CEO Chuck Robbins, speaking to investors in the wake of fairly disappointing quarterly financial results, said that Cisco plans to accelerate its investments in key strategic areas including cloud security, cloud collaboration, increased automation in the enterprise, as well as application insights and analytics.

The networking giant declared this week a quarterly revenue decline of nine percent  year-on-year, equivalent to $12.2 billion, as well as a five percent  dip on annual revenue to $49.3 billion. In spite of this, Cisco made profits during the last quarter of $2.6 billion, which represented a 19 percent  surge.

“And as they went into this work-from-home environment, as I said on our last call, those who had technical debt and those who had not really invested in modernising their infrastructure, they know they will need to do that, and they’ll do it at different paces based on their financial abilities. I’d say that it’s clear that many of our customers do want to consume the technology as a service.”

Robbins confirmed that Cisco will examine its entire portfolio to see how easily each part can be shifted over to an ‘as a service’ delivery.