For years, Cisco has been synonymous with routers and switches, the hardware that underpins the internet and enterprise networks. But the company is undergoing a strategic metamorphosis aimed at transforming it into a comprehensive provider of software, cloud services, security, and identity management, especially in the emerging artificial intelligence ecosystem. According to analysts, the goal is clear: to move from selling boxes to selling recurring subscriptions and become a full-fledged network operator.

The shift toward recurring revenue

In its latest fiscal third-quarter earnings report (May 2025), Cisco revealed that 49% of its total revenue already comes from subscriptions to software, security, and support contracts, rather than one-time hardware sales. This change is no accident: it responds to a deliberate strategy of platformization aimed at retaining customers and generating predictable cash flows. As Jack Gold, president of J.Gold Associates, notes, “What they are trying to do is get to a point where, instead of just selling a server or a switch and ending the relationship, they basically become a cloud service provider.”

This transformation is not trivial. It involves restructuring the entire product portfolio, unifying management consoles, and competing directly with cloud giants like Amazon Web Services, Microsoft Azure, and Google Cloud, which already offer integrated networking, security, and identity solutions. However, Cisco has a unique advantage: its massive presence in the network infrastructures of enterprises, telecom operators, and service providers gives it unparalleled visibility into data traffic.

Security and identity management for the AI era

One of the pillars of this new strategy is advanced cybersecurity, especially in the realm of artificial intelligence. Cisco has identified an incipient but critical market: identity management for AI agents. While identity tools for human users (such as Active Directory or SSO) are mature, managing millions of autonomous agents—bots, virtual assistants, automated processes—that interact with each other and with corporate systems is a virtually unexplored challenge.

“This is a new frontier,” says Gold, who adds that many organizations still don’t know how to address this challenge. To fill this gap, Cisco announced in May the acquisition of Astrix Security (for an undisclosed amount), a startup specializing in security platforms for non-human identities, including machine-to-machine connections and AI agents. This acquisition strengthens Cisco’s portfolio in an area that promises to be key in the coming years.

Artificial intelligence not only creates new threats but also demands new forms of authentication and authorization. Cisco plans to integrate Astrix’s capabilities into its unified management console, allowing companies to govern who (or what) accesses which resources in an environment where AI agents will be as numerous as human employees.

Cloud Control: the console that unifies everything

Just this month, Cisco launched Cloud Control, a new comprehensive management scheme that promises a single control plane for networking, security, computing, observability, and collaboration. This is a bold move to solve one of its customers’ biggest pain points: tool fragmentation. Historically, Cisco products (Catalyst, ISE, Firepower, etc.) operated independently, forcing IT teams to jump between consoles.

“They still have many ‘components’ that are not fully integrated into customer environments,” Gold acknowledges. “That’s why they are trying to build a global cloud management console. But it can be problematic for many customers who have been using individual components for years to achieve full integration, especially if they also have network products from other vendors.”

Cloud Control aims to be that “single pane of glass” that centralizes the administration of all Cisco infrastructure, from access switches to next-generation firewalls, Wi-Fi access points, and collaboration tools like Webex. If successful, it will greatly simplify the daily operations of network administrators and security teams.

To delve deeper into how automation and AI can alleviate operational burden, we recommend reading our article How to Delegate 40% of Tickets to AI: A Strategic Guide for SysAdmins and DevOps.

The competition: HPE, Palo Alto, and the hyperscalers

Cisco is not alone in this race. Hewlett Packard Enterprise (with its Aruba platform) and Palo Alto Networks (with Prisma) are also moving toward integrated platform models. Meanwhile, cloud hyperscalers offer security and identity solutions tightly coupled with their ecosystems (AWS IAM, Azure AD, Google Cloud Identity). However, Cisco has a card that its rivals envy: a massive installed base and trusted relationships with companies of all sizes, telecom operators, and semiconductor manufacturers.

“They are the 800-pound gorilla in this space,” Gold states. This scale allows it to negotiate global deals, integrate with multiple clouds, and offer support that smaller providers cannot match. Moreover, its bet on artificial intelligence is not limited to security; it is also incorporating AI capabilities into its observability and network automation tools.

To better understand how AI is transforming traditional IT roles, check out our analysis AI Is Revolutionizing Everything: Where Do Entry-Level Tech Jobs Stand?.

The future: Cisco as a full-fledged network operator?

Looking ahead, Cisco’s ambition is clear: to become more than a hardware provider. It aspires to be the full-fledged network operator that oversees and secures data flow and AI-driven activity in complex environments, whether on-premise, cloud, or hybrid. This implies not only selling equipment but also managing security, identity, observability, and automation end-to-end.

For enterprises, this evolution represents both an opportunity and a challenge. On one hand, the promise of a unified platform reduces complexity and operational costs. On the other, it implies greater dependence on a single vendor, which can create vendor lock-in risks. The key will be how Cisco executes the integration of its multiple products and whether it can maintain the flexibility demanded by multicloud environments.

If you want to learn more about how other companies are approaching their digital transformation, don’t miss our Success Story: Digital Transformation in a Logistics Company.

Original source: ComputerWorld. Analysis and adaptation by ForgeNEX.