Cisco Systems, Inc. (NASDAQ:CSCO) is making a big departure from its business of selling data center equipment with an ambitious plan of dominating software subscription business. The tech giant known for its network enabling capabilities has unveiled a new software that it says will help its corporate clients better manage their networks.
Cisco Software Subscription Push
The tech giant has also unveiled a set of new data center switches designed to supplement the capabilities of the new software. Unlike in the past, customers who buy the switches will have to pay a subscription service to access a number of software features.
The software subscription plan is part of Cisco’s latest business plan that seeks to counter years of legacy business decline. In the past, the company sold most of its equipment’s pre-installed with software. The fact that businesses are increasingly buying computing resources on demand prompted the change in the way the company addresses the market amidst spiraling competition.
Countering Competition
Cisco is not the only company that has turned to the pay-as-you-go business model. Juniper Networks, Inc. (NYSE:JNPR) has also deployed the business model in what many observers believe is an attempt to counter the threat posed by other tech giants when it comes to computing resources.
“We looked at what we saw happening in the industry and where we saw things going and what I felt was we had a need to shift investments into our core technologies more aggressively than we had,” said Cisco CEO, Chuck Robbins
The software subscription model will make it easier for Cisco to issue new updates to counter any competition in the industry. The model also allows the company to predict with ease future revenue. Delivery of new software through the internet instead of boxes will also come into play. Detection of security threats with ease will also be possible allowing the company to promptly develop fixes.
Cisco also plans to use the new model to sell its clients others services especially with the growing focus on the internet of connected devices.
Cisco Systems stock was down by 0.44% in Tuesday’s trading session to end the day at $31.85 a share.