At the end of 2013, Cisco (CSCO, Financial) looked down and out. The company was struggling due to slow traction in the emerging markets, and network spending was not up to the mark. But Cisco has made a strong comeback in 2014. Its stock is up 15%, and it looks like it will continue improving. The company has introduced new products, and this could take it to new highs. Let's see what's in store for Cisco and why it should improve in the future.
New products to drive growth
Cisco is relying heavily on the new application-centric infrastructure. It has a line of products ready to dominate the market. Sales of its ACI-enabled platforms such as Nexus 9000 are growing at a high rate, and are expected to reach 1,000 customers by 2015.
The 802.11 ac ramp is proceeding successfully, with AP3700 being the fastest access point. The ASR9000 router is seeing solid traction in the market. The newly-introduced products, including NCS6000 and CRS-X, are proving to be catalysts for growth.
In technology innovations, Cisco is building hybrid cloud environments and introducing the next generation of collaboration solutions. The company is delivering a whole new suite of connected TelePresence products. Synergy sees Cisco as the No. 1 cloud infrastructure and cloud service provider. In addition, Cisco has announced partnerships with Telstra, Sungard Availability Services, and many other partners to offer its customers a network of clouds with WebEx and Meraki.
On the security front, Cisco has entered into a deal with cyber security company, ThreatGRID, which will offer its customers an intelligent system to defend attacks across networks. The company is strategically taking advantage of the demand for security functions that are emerging because of growing threats. eBay (EBAY, Financial) and Target (TGT, Financial) are both hunting for schemes that will aid their recovery. With such tactics, Cisco is making great strides to capture the cyber security market needs.
The Internet of Things opportunity
Cisco has put in $150 million in Internet of Things start-ups, which is a great move toward securing interest and ventures from top enterprises. By 2020, there will be nearly 26 billion devices on the Internet, as per Gartner’s forecast. Cisco has recruited a very efficient research team on the Internet of Things to bolster its prospects.
Cisco also announced that it is looking to buy collaboration app provider Assemblage in order to boost its Internet of Things efforts. Hilton Romanski, senior vice president and head of business development at Cisco, said:
“In addition, Assemblage’s experience integrating with third party cloud ecosystem applications like Box and Google shows a close alignment to Cisco’s collaboration strategy and our commitment to simplicity and interoperability.”
Assemblage's technology integrates with popular third party cloud services and supports 40 different file types to enable quick and efficient collaboration.
In addition, Cisco also completed the acquisition of Tail-f Systems to gain an upper hand over its Internet of Things peers. Cisco says that “with Tail-f's network service orchestration technology, Cisco's service provider cloud and virtualization portfolio will simplify and automate the provisioning and management of both physical and virtual networks.”
Cisco is also looking to build Asia's end-to-end first Internet of Things innovation hub in India. Morgan Stanley predicts that India’s Internet penetration will grow at a CAGR of 25% and will hit 519 million users in 2018. Thus, Cisco’s early leap into the Indian market will prove to be fruitful in the long run.
Citing Cisco’s shrewd moves, Cantor Fitzgerald has raised it price target to $31. Cantor analyst Brian J. White expects Cisco’s recovery to start gathering pace soon and Cisco’s progress in the Application-Centric Infrastructure has started to lessen the SDN concerns.
Conclusion
Cisco is moving in the right direction with its product development moves. The company looks set to perform well in the future, and investors can expect the turnaround to continue.
