June 20, 2017 / 9:26 PM / 2 years ago

Cisco adds subscription services to its core networking business

SAN FRANCISCO (Reuters) - Cisco Systems Inc’s (CSCO.O) core networking business on Tuesday took its first step into the market of subscription services, announcing a suite of new security and automation tools for big businesses.

The logo of Cisco is seen at Mobile World Congress in Barcelona, Spain, February 27, 2017. REUTERS/Eric Gaillard

This new “intuitive network” represents a major change in how Cisco generates revenue from its flagship business. The San Jose company has been dependent on the sales of networking equipment that routes traffic on the internet.

Moving forward, Cisco hopes its clients will subscribe to the new networking services, creating a recurring stream of monthly revenue.

“We have, over the last two years, had an increasing focus on our software and subscription business,” Cisco Chief Executive Officer Chuck Robbins told Reuters.

“For this transition to software and subscription to really become material over time we needed to find a way to bring subscription value to the core networking.”

Altogether, the new services are intended to help enterprises run more intelligent networks with automation features and data analytics. Key among the new services is the capability to detect malware, alerting administrators of an intrusion and potentially quarantining affected devices.

Robbins emphasized that these services work only when integrated with Cisco’s hardware equipment.

The announcements come one day after key tech leaders met with U.S. President Donald Trump in Washington. The meeting included the likes of Apple Inc (AAPL.O) CEO Tim Cook, Microsoft Corp (MSFT.O) CEO Satya Nadella and Amazon.com Inc (AMZN.O) CEO Jeff Bezos. Robbins was originally scheduled to attend but pulled out to focus on the product launch.

Robbins said he was excited by the Trump administration’s pro-business stances with tax reform in particular.

“We’ve heard a lot over the last 48 hours about their commitment to tax reform, which is incredibly important to Cisco,” Robbins said. “That’s the No. 1 thing that we would like to see accomplished.”

Reporting by Salvador Rodriguez; Editing by David Gregorio

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