The Evolution of Cisco (CSCO): From Inception to Industry Leadership in the AI Era

Business Overview: Redefining the Digital Foundation

Cisco Systems, Inc. (NASDAQ: CSCO) is a multinational technology giant that designs, manufactures, and sells networking hardware, software, and telecommunications equipment. Serving enterprises, service providers, small businesses, and governments globally, the company has successfully pivoted its focus to become a platform leader in Secure Networking, Observability, and Cybersecurity.

Strategic Pillars: The Modern Focus and AI-Native Evolution

Cisco’s strategy is currently driven by a comprehensive platform approach centered on three key areas, now deeply infused with AI:

• AI Infrastructure & Data Fabric: Providing the high-speed networking backbone (switching, routing, and optics) required for massive AI training and inference data centers (e.g., 800G Ethernet technology). The focus is now on the “AI-Ready Network,” designing campus and data center switches, powered by Cisco Silicon One chips, to handle AI’s unique and demanding traffic patterns.
• Security & Observability (Splunk Integration): Delivering a unified platform that connects and protects the entire digital footprint. This is evolving into the Cisco Data Fabric, which uses the machine data harvested by Splunk to feed AI models for predictive security and automated network health management (AgenticOps).
• Software & Subscriptions: Transitioning the core business model from one-time hardware sales to high-margin, predictable Annual Recurring Revenue (ARR). This is a foundational shift, evidenced by the fact that over half of total revenue is now subscription-based.

Historical Context and Legacy

Inception and Founding Cisco Systems, Inc. was founded in December 1984 by Leonard Bosack and Sandra Lerner, a married couple working at Stanford University. Their revolutionary idea was to create the multiprotocol router, allowing disparate computer networks to communicate, thus laying the foundation for the modern Internet. The company went public on February 16, 1990.

Key Acquisitions – Cisco’s strategic acquisitions have always driven its evolution, from core networking to software platforms.

The Splunk Acquisition (2024) and Data Fabric

Cisco’s largest and most transformative acquisition to date was the completion of its purchase of Splunk for approximately $28 billion in March 2024. This move is a cornerstone of Cisco’s future strategy, immediately positioning the company as one of the world’s largest software companies. The integration has led to the development of the Cisco Data Fabric, a revolutionary architecture announced in late 2025, which aims to unify machine data across the edge, cloud, and on-premises environments, turning it into AI-ready intelligence for proactive IT and security operations.

Industry Dynamics: Competition and the AI Battleground

The AI era has intensified competition, making the network’s role central to business success.

The most significant competitive battle is in the AI data center, where Arista Networks and Cisco fiercely contest the market for high-speed switches and optics that connect AI clusters. Cisco’s strategy is to integrate security directly into this new AI infrastructure using its new Hypershield architecture, creating an AI-Native Security Fabric to address new AI-powered threats.

Financial Strength: Stability in Transition

Cisco’s FY2025 results underscore steady growth amid transformation — $56.7B in revenue (+5%), $3.81 EPS, and $31B ARR. AI infrastructure orders exceeded $2B. The company’s financial position remains robust, with $20B in cash and $15B+ annual free cash flow, reinforcing its balance sheet strength.

Stock Market Analysis (CSCO)

As of October 29, 2025, Cisco closed at $72.62 (+1.74%), with a $295B market cap. Forward P/E stands near 17.5x with a 2.3% dividend yield. Analysts rate it a ‘Moderate Buy,’ viewing Cisco as a steady cornerstone in AI infrastructure — less speculative than chipmakers, yet central to the AI economy.

• The AI Catalyst: The successful conversion of AI Infrastructure orders to over $2 Billion in FY25 is the most significant new growth narrative. This demand for high-speed networking fabrics from webscale and hyperscale customers is a major tailwind.
• The Subscription Pivot: The shift to a software-heavy business (aided by Splunk) is praised for generating higher margins and increased revenue predictability. However, some analysts note that the transition has resulted in short-term volatility in product orders as customers adopt new consumption models.
• Forward Outlook: Positive FY 2026 guidance (midpoint of $59-60B revenue and $4.00-$4.06 EPS) suggests management is confident in the execution of the Splunk integration and the sustained demand for AI networking products.

Leadership: Guiding the Future of Networking

CEO: Chuck Robbins – The Transformation Architect

Chuck Robbins took on the CEO role in July 2015, succeeding the legendary John Chambers. His leadership is defined by the strategic pivot toward security, observability, and AI infrastructure.

• Pre-CEO Career: Robbins joined Cisco in 1997 and steadily climbed the ranks, gaining deep operational knowledge. Crucially, before becoming CEO, he served as Senior Vice President of Worldwide Field Operations, where he was responsible for the global sales and partner organizations. This role, managing Cisco’s massive go-to-market engine, gave him a profound understanding of customer needs and was instrumental in developing the company’s powerful $40+ billion partner program, laying the groundwork for the eventual shift from one-time sales to recurring revenue models. He was also an executive sponsor for critical earlier acquisitions like Sourcefire and Meraki, demonstrating his commitment to software and cloud long before the Splunk deal.

The Executive Team: A History of Software Transformation

The executive team comprises leaders specifically selected for their experience in driving subscription and cloud-native business models, which are central to the current strategy:

Jeetu Patel (President and Chief Product Officer – former EVP, Security and Collaboration):

• Strategic Focus: Patel is the driving force behind the product vision, focusing on a unified platform, high-velocity innovation, and simplified user experience across Cisco’s portfolio.
• Prior Experience: Before joining Cisco in 2020, Patel was the Chief Product Officer and Chief Strategy Officer at Box, where he pioneered the company’s transformation from a single-product cloud application to a multi-product platform company, leading high-growth SaaS and platform business units. His expertise is critical in ensuring the Splunk and core Cisco portfolio successfully merge into a cohesive, subscription-based experience.

1. Scott Herren (EVP and CFO):

• Strategic Focus: Herren guides the financial architecture of the subscription shift, ensuring predictable revenue and efficient integration of the recurring revenue model (ARR).
• Prior Experience: Herren was appointed CFO in 2020. Before Cisco, he spent over six years as the CFO of Autodesk, where he was instrumental in orchestrating that company’s business model transformation from perpetual licenses to SaaS subscriptions. This proven track record in financial model overhaul was the primary reason for his recruitment, making him uniquely qualified to manage Cisco’s complex pivot and the financial integration of a massive software company like Splunk.

Liz Centoni (EVP, Chief Customer Experience Officer – former Chief Strategy Officer):

• Strategic Focus: Centoni now leads the massive Customer Experience organization, focusing on helping customers adopt and realize value from Cisco’s software and subscription products.
• Prior Experience: A long-time Cisco veteran, Centoni has held key roles across engineering, including leading the Cloud, Compute, and IoT business. As the Chief Strategy Officer, she was the architect of the company’s strategic roadmap, most notably leading the internal push and execution of the Splunk acquisition, positioning the company’s overall strategy squarely around AI data and observability. Her technical depth (B.S. in Chemistry, M.B.A.) and hands-on experience in cloud and infrastructure are central to the company’s AI-focused product roadmap.

A Platform Leader in the AI Economy and the Future of Network Resilience

From its origins as the pioneer of the multiprotocol router, Cisco has successfully navigated multiple technological shifts, from the rise of the Internet to the cloud computing era. Its contemporary success is rooted in its ability to adapt and acquire necessary capabilities to pivot into an AI-native platform company.

The AI Imperative: Connecting and Securing the New Data Center

Cisco’s future is fundamentally tied to the massive build-out of Artificial Intelligence infrastructure. This strategy plays out across three critical and intertwined layers:

1. The AI-Ready Infrastructure (The Foundation):

• Cisco is focused on ensuring its hardware is the de facto standard for AI training and inference. This involves proprietary silicon (Cisco Silicon One) and high-density optics (800G and beyond) designed to power the next generation of hyperscale and enterprise AI clusters.
• The goal is to move beyond merely providing connectivity to delivering a network that is aware and adaptive. This infrastructure actively manages the unique, bursty, and loss-sensitive traffic patterns of GPUs, ensuring model training runs efficiently without costly delays. Cisco is positioning the network itself as a strategic asset that optimizes AI workload performance, directly competing with dedicated AI fabric vendors.

1. The Observability and Data Fabric (The Intelligence):

• The Splunk acquisition is the key that unlocks Cisco’s AI ambition. It provides the Cisco Data Fabric, unifying the vast streams of data generated by the network, security devices, applications, and endpoints.
• This unified data store feeds Cisco’s in-house AI models. This capability moves the company from reactive security and IT management to predictive operations. For example, the system uses this data to predict a security threat before it impacts the network or anticipates a network degradation before it affects application performance. This is the heart of the concept of AgenticOps, where AI agents automatically diagnose and resolve issues across the entire digital ecosystem.

1. The AI-Native Security (The Protection):

• The emergence of GenAI has empowered attackers, requiring a new class of defense. Cisco’s response, including the Hypershield architecture, embeds security directly into the network fabric itself, leveraging the same powerful chips that drive the switches.
• This allows security to be applied at machine speed and at massive scale, acting as a dynamic, autonomous defense layer. The platform uses AI to detect novel attacks and automatically reconfigure the network to contain threats, creating a truly AI-Native Security Fabric.

In essence, the Splunk acquisition is not just an investment; it is the platform foundation that allows Cisco to compete in the data-driven world of AI and advanced cybersecurity. By providing the essential high-speed AI infrastructure and the integrated secure/observability platform to run it, Cisco is well-positioned to maintain its dominance as a critical enabler of the digital and AI revolution for years to come. The future for Cisco is about selling a unified, AI-native platform—not just boxes—to secure, observe, and power the next generation of computing.

Author’s Note

This article was co-authored by Andrea Turno and Sandeep Panesar, both regular writers for Betweenplays.com

Data Sources

1. Business Overview, Financial Highlights, and Guidance

https://investor.cisco.com/news/news-details/2025/CISCO-REPORTS-FOURTH-QUARTER-AND-FISCAL-YEAR-2025-EARNINGS/default.aspx

https://www.alpha-sense.com/earnings/CSCO

https://www.techzine.eu/news/infrastructure/133827/cisco-posts-strong-quarter-thanks-to-ai-infrastructure

2. Strategic Acquisitions & Dates

https://siliconangle.com/2024/03/18/cisco-completes-28b-acquisition-splunk

https://newsroom.cisco.com/press-release-content?articleId=1945408

https://www.builtinaustin.com/articles/cisco-aquires-duo-security

3. Product & Architecture Announcements

https://investor.cisco.com/news/news-details/2025/Cisco-Data-Fabric-Transforms-Machine-Data-into-AI-Ready-Intelligence/default.aspx

https://newsroom.cisco.com/c/r/newsroom/en/us/a/y2024/m04/cisco-reimagines-security-for-data-centers-and-clouds-in-era-of-ai.html

4. Executive Biographies

https://www.sourcewatch.org/index.php/Cisco_Inc.

https://newsroom.cisco.com/c/r/newsroom/en/us/executives/jeetu-patel.html

https://newsroom.cisco.com/c/r/newsroom/en/us/executives/r-scott-herren.html

https://newsroom.cisco.com/c/r/newsroom/en/us/executives/liz-centoni.html