A cheerful John Chambers told Wall Street analysts on Wednesday that his plan to crush his biggest threat, a new technology led by VMware, is working well.
The network industry, where Cisco dominates, is at the cusp of a huge change called software-defined networking. That's where the high-end features built into expensive routers and switches are put into software that can run on cheap, commodity hardware.
The movement is being led by VMware and a startup it acquired in 2012 for $1.26 billion called Nicira. Nicra's founder more or less invented SDN.
Since then, this has been one of the hottest enterprise markets in the tech industry. Startups barely out of stealth have been bought for $10 million to more than $170 million. Cisco's biggest rival, HP, has jumped into the market, big time. Oracle has been buying SDN startups, too. Even Facebook is building an SDN product.
A year ago, Chambers, without an SDN product of his own, was pooh-poohing the idea of SDN. In November, a Bank of America Merrill Lynch analyst downgraded Cisco for fear it was blowing it in the SDN market.
On today's call, Chamber's attitude was completely different.
Six months ago, he launched Cisco's SDN competitor build by a spin-in company, Insieme, which Cisco promptly bought for $863 million. Cisco named that product the Application Centric Infrastructure (ACI).
Experts say ACI shows promise but is still "barely baked," wrote Joel Snyder who tested it for Network World in March.
Cisco hasn't sold very many routers with ACI yet, Chambers revealed on Wednesday's call. He said that "over 50 customers" are testing Cisco's ACI SDN software and that it has sold 175 of the high-end routers that runs that software, the Nexus 9000 line.
But big sales isn't his immediate goal. He simply wants his customers to be impressed enough with Cisco's product to wait for the company to work out the bugs, and not jump to a competitor.
On Wednesday's call he sounded jubilant about that progress.
"You might have seen a small startup [Nicera] and VMware combine. They've been out there for five plus years. We're taking almost all of those customers back. Momentum feels very, very good. I think you'll see us knock 'em off one after another."
He warns that it will take another one or two quarters before these expensive switches are really selling well. But he has personally "probably called 100 CIOs in the last quarter." When he tells them Cisco's SDN strategy, "the CIOs get it, they buy into it, and we're in extremely good shape in enterprise."
Just to emphasize that, he later said: "I feel very comfortable with ... how we're going to embrace SDN and benefit from it. We're going to lead on SDN."
As the world's biggest networking vendor Cisco certainly could and should do that.
And it's got one big advantage on its side: This isn't the kind of change that happens overnight. It will take years, maybe even a decade or more, for companies to remake their networks with SDN. Businesses rely on network uptime. They don't mess with quickly or that lightly.
In the meantime, a growing number of competitors are waiting in the sidelines should Cisco mess this up.
We reached out to VMware for comment and will update when we hear back.