‘If you listen to really smart people around the globe, they’ll tell you that [AI] is one of those technologies that is actually going to live up to the hype. And so the $1 billion global AI investment fund we just announced this week, that’s just the start for us, frankly,’ Cisco Executive Vice President and Chief Strategy Officer Mark Patterson tells CRN.
AI, Security Take Center Stage At Cisco Live
Cisco Systems this week held its annual Cisco Live conference where the focus was on AI, security and the massive integration with its latest acquisition, that of Splunk, a builder of analytics and digital resilience technology.
Mark Patterson, Cisco’s executive vice president and chief strategy officer, told CRN during the conference that when he and his teams look at short-term and long-term strategies, AI and security are at the top of the list of priorities because those are also topping customer and channel partner priorities.
AI, for instance, is being infused across much of Cisco’s entire product portfolio and indeed was at the heart of a $1 billion global AI investment fund the company unveiled aimed at investing in AI-focused startups, Patterson said.
[Related: Cisco CEO Chuck Robbins: Moving Fast To Win The AI Battle]
“If you listen to really smart people around the globe, they’ll tell you that [AI] is one of those technologies that is actually going to live up to the hype,” he said. “And so the $1 billion global AI investment fund we just announced this week, that’s just the start for us, frankly.”
When it comes to bringing AI to market, Cisco is keenly aware of the need to have the right partnerships—both strategic vendor partners and channel partners—in place to succeed, Patterson said.
“It’s still a very nascent space in the enterprise at least, and our customers are still telling us very candidly, ‘Hey, I’m being told to move fast. I need an AI strategy. I have no idea what my use case is. I don’t know what data I need to bring together. I don’t know how the network needs to change or how I need to rearchitect things. What kind of value am I going to get out of this? What’s it going to ultimately cost me?’” he said. “So there’s a huge opportunity for our partners to really play a big role in helping our customers navigate this.”
Here is more from CRN’s interview with Patterson.
Cisco is a networking company. My question to you is, where’s the networking at Cisco Live? All the talk here is AI, it’s Splunk, it’s security. Where’s the networking?
Networking is a huge priority for us. What we hear from our customers is, ‘Don’t ever forget you’re a networking company. We need you to do the basics,’ really is essentially what they tell us. When Chuck [Robbins, Cisco CEO] went through the customer priorities—modernize your infrastructure, build in digital resilience and business resiliency, etc.—there’s a huge networking play there. The other priorities are around cybersecurity and AI, but even in both of those, there’s a play for networking as well. You heard Jeetu [Patel, Cisco’s executive vice president and general manager of security and collaboration] talk a lot more about how secure networking is becoming a reality and about essentially putting security through the entire fabric of the network. And then obviously there’s a huge networking component to the AI strategy as well. ... It’s actually a good question because it’s something we never want to lose sight of. Because our customers tell us, ‘Look, if you don’t do that well, we don’t get to go do the fun stuff.’
As chief strategy officer, how far ahead do you look to come up with some of the things you need your people to start working on?
That’s a great question. I would say there’s a short-term sort of prioritization that we drive through the company and where we need to focus. I still run the Office of the CEO as well. And there’s a balance with the longer term. I’d say three to five years. You get beyond that and people start to lose a little interest and wonder whether they’ll be there or it’ll be their successors that actually benefit from what they’re doing. But yes, I’d say the three- to five-year framework is sort of what we’re dealing with. We just had our Investor Day this week and outlined priorities through 2027.
What are you looking at during the next three- to five-year frame? What are some things that you see that you really need to take advantage of?
Certainly, all the hype around AI. If you listen to really smart people around the globe, they’ll tell you that this is one of those technologies that is actually going to live up to the hype. And so the $1 billion global AI investment fund we just announced this week, that’s just the start for us, frankly. You’re going to see that continuing to play out for several years in the enterprise, as well as obviously the cloud players and the hyperscalers. So that’s one big area.
Cybersecurity, there’s nobody giving up on hacking, and the threat landscape is certainly not stopping. And so I think that’s going to continue to be a big area of focus for us as well. And we’re also looking at things that are further out. We’ve got a team that works with seven different universities. We’ve got 16 patents in the quantum space as well. Quantum security is a big thing that we're looking at. So it’s a combination of, what do we need to do now as a company, as well as what are the things that are going to give us durable long-term growth and allow us to succeed in the future?
While adoption of the cloud was fast compared with that of past technologies, AI appears to be seeing a much faster adoption. So what comes next? What’s the next hyped thing that you see impacting Cisco and the industry? And how quickly might that be adopted?
We’re still in the early days of AI. And I think when you look at AI right now, the vast majority of the revenue is in the GPUs. Over time, it’s going to be companies that are actually able to bring a more robust offering or platform to the enterprise space that are going to be the winners. I think with our billion-dollar AI fund, we’re not looking to just invest. The partnerships that are going to play out are going to be really key as well. Our partners in the ecosystem are going to play a big role. It’s because no matter what you hear, it’s still a very nascent space in the enterprise at least, and our customers are still telling us very candidly, ‘Hey, I’m being told to move fast. I need an AI strategy. I have no idea what my use case is. I don’t know what data I need to bring together. I don’t know how the network needs to change or how I need to rearchitect things. What kind of value am I going to get out of this? What’s it going to ultimately cost me?’ So there’s a huge opportunity for our partners to really play a big role in helping our customers navigate this.
When you say ‘partners,’ are you talking about technology partners or channel partners?
Well, both, actually. I think there’s an ecosystem play, certainly with the companies that we’ve just announced initial investments in: Mistral, Cohere and Scale AI. None of those have an enterprise go-to-market. But there are certain things they offer in that AI full technology stack, and there are a lot of things they don’t. And so I think looking for a partner like us to really come together and have a one plus one equals three for our customers, we really bring more value. And for our traditional channel partners in the ecosystem—the resellers, the integrators, etc.—that we have, there’s a huge role to play in terms of really being that business partner in the front facing the customers to help them navigate and get in and really answer a lot of questions.
I can’t say company names. I can’t really comment on timing, or the number of companies. I would just say that we’re spending a lot of time looking at the right fit, the right talent. We want partners with strategies that really combine well with what we’re trying to do. And we’re going to be very, very active there. So I would look to see a number of announcements here in the near future.
Will some of the companies that get investments from this fund be potential acquisition targets for Cisco?
Could be, certainly. I’m not going to name any, but that’s always something that we evaluate.
The companies Cisco is investing in via its AI fund are still young companies. Aside from the equity Cisco gets, what does Cisco expect from partnerships with these companies? Are you investing specifically with the idea of partnering with their technology?
I would say yes. The valuations in this space are significant, so our investors would want to see a real sound ROI in terms of any sort of acquisitions that we make. You saw us make a very big acquisition with Splunk. And so where we see the right fit and the right business case, we’lll do that. But at the same time, I think that we’re really looking for companies that we can partner with. Many of these don’t really have an enterprise go-to-market. And they’re very attracted to the relationships that we have, and the relationships that our partners have and that global scale that we have, and expertise we can bring to the table. And so I think it’s going to be largely around partnerships.
How many of your channel partners, from enterprise to small-size, do you think are ready for this AI move? Not only from Cisco, but AI in general?
I don’t know if I would put a number on it. But certainly, I think it’s implied in your question that there are another number of them that aren’t ready. Certainly. We just announced this AI specialization for our partners in this track that we build out. I think that’s going to really help. Then we’ve got a number of other really capable partners that have clusters that are already in their labs and they’re working with our networking and servers and storage and really trying to figure out how to bring to customers a more simple, integrated stack. I think they’re going to run the gamut a little bit. But we’re determined to make sure that we do everything we can to make the partners as capable as possible. But we have this transition.
What do you think channel partners need to do to be ready for AI?
I think the big thing right now is just being in the conversation and taking initiative. I think as we roll out things like HyperFabric, being able to bring that into their labs and work on active models and learning from that. And that’s what we're encouraging the enterprises to do as well. We’ve certainly done that. We’ve got a 256-GPU cluster that we’re working off of internally. We’re just learning from that every day. So I think a lot of it’s just being in the conversation, staying close to customers, understanding what they’re trying to navigate, and being able to offer the expertise or bringing in additional folks to do just that.
In the new Cisco Nexus HyperFabric AI cluster Cisco just introduced, Cisco is partnering with Nvidia and Vast Data. Cisco traditionally has partnered with NetApp, Pure Storage and other vendors with its HyperFlex hyperconverged infrastructure technology. Will other storage vendors participate in Cisco’s new AI clusters?
We’ve always thought it is important to be technology-agnostic and really be able to work with our customers where they have their preferences. We’re just going to try to build cloud-managed, integrated clusters that you’re going to be able to slot different GPUs and different storage into, Nothing new to announce as of yet, but you can expect that it’ll be as agnostic as possible for our customers to meet their needs.
You were involved with Cisco’s acquisition of Splunk. Did Cisco reach out to Splunk and say the two should get together, or vice versa?
You can go back and look at the proxy filings. We actually took a hard look at Splunk, I want to say it was maybe 12 [months] to 18 months ahead of when we actually did engage in the combination. So we’ve been looking at that for quite a while. I think when we actually did make the announcement, most people thought, ‘Wow, this is a no- brainer. We see the value that these companies combined will drive.’ It’s been a huge success in a very limited amount of time thus far, but you’ve seen the messaging [at Cisco Live] all week. There’s going to be a lot to look forward to.
What else do you think the readers of CRN need to know about your strategy and Cisco’s strategy?
As you look across the AI technology stack, Cisco has a major role to play, along with the investments we’re making and the partnerships we’re going to drive and our customers are ultimately looking to drive. We’re here for the long haul, and we’re going to continue to invest and continue to partner where it makes sense. And the channel partners themselves are going to have a very rich business that is built off this for many years.
