For years, Cisco has been synonymous with switches and routers, the hardware that sustains enterprise networks. But the company is undergoing a quiet yet profound transformation: it wants to be recognized as a software and services giant, with a firm foothold in the cloud, security, and artificial intelligence. This is not a simple strategic shift but a complete overhaul of its business model, where recurring subscriptions and integrated platforms are the new currency.

From One-Time Sales to Recurring Revenue

Jack Gold, president of J.Gold Associates, explains it clearly: “What they’re trying to do is get to a point where, instead of just selling a server or a network switch and ending the relationship, they basically become a cloud service provider.” The numbers back this vision: in the third quarter of its fiscal year, Cisco reported that 49% of its total revenue came from software subscriptions, security, and support contracts. That figure marks a milestone on its path to recurrence, a model investors value for its predictability.

The strategy is not new, but it has accelerated. Cisco has been acquiring software and security companies and restructuring its portfolio to package solutions rather than selling individual components. The goal: customers should not buy a router but a subscription that includes the equipment, management software, security, and support, all integrated into a cloud platform.

Security and Visibility: The Differential Advantage

The core of this transformation lies in security and network visibility. With its equipment deployed in thousands of enterprises, telecom operators, and service providers, Cisco has a privileged position to observe data traffic. Gold notes that this visibility allows it to expand into advanced security offerings, especially now that artificial intelligence introduces new attack vectors and complexity.

One of the most promising opportunities is identity management for AI agents. While identity tools for humans have been maturing for decades, the concept of managing identities for millions of AI agents—bots, virtual assistants, automated processes—is almost virgin territory. “This is new ground,” says Gold, and many organizations still don’t know how to approach it. Cisco wants to be the first to offer a robust solution.

In May, Cisco announced the acquisition of Astrix Security, a startup specializing in protecting non-human identities and machine-to-machine connections. Although the amount was not disclosed, the move strengthens its security portfolio for AI agents, a market that promises to grow exponentially as more companies adopt autonomous AI agents.

The Integration Challenge: Cloud Control as the Answer

Despite the progress, Cisco has a historical problem: its portfolio consists of dozens of products that do not always communicate well with each other. “They still have many components that are not fully integrated into customer environments,” Gold admits. To fix this, the company has launched Cloud Control, a new comprehensive management scheme that promises a single control plane for networking, security, computing, observability, and collaboration.

Cloud Control is ambitious, but its success depends on customers adopting a unified platform instead of continuing to use individual tools, many from other vendors. Gold warns that “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 manufacturers.” Interoperability will be key.

Competition and Advantages: The 800-Pound Gorilla

Cisco is not alone in this race. Rivals like Hewlett Packard Enterprise and Palo Alto Networks are also 'platformizing' their offerings, while hyperscalers (AWS, Microsoft, Google) integrate security and identity into their clouds. However, Gold believes Cisco maintains a significant advantage due to its scale and reach: “They are the 800-pound gorilla in this space.” Its installed base is enormous, and its partnerships with enterprises, operators, and chip manufacturers give it unparalleled distribution power.

Even smaller business lines like UCS servers or Webex do not tarnish its dominant position. The company aims to be more than a hardware provider: it wants to act as a comprehensive network operator, overseeing and securing data flow and AI-driven activity in complex environments. For IT professionals, this means that network and security management is becoming a managed service, not a set of products.

Implications for Enterprises and IT Professionals

Cisco's transformation has direct consequences for IT departments. First, the shift to subscriptions changes the cost structure: from capital expenditures (CAPEX) to operating expenses (OPEX). Second, integrating security and identity into the network forces a rethink of zero-trust architectures and access management. Third, the arrival of AI agents will require new identity and control policies, a field where Cisco wants to be a leader.

For system administrators and security officers, the message is clear: the network is no longer just a data conduit but a platform for intelligence and security. Cisco is betting on becoming the orchestrator of that platform, and those who adopt its vision could simplify their technology stack but also become tied to a closed ecosystem. As always, the decision will depend on the balance between integration and flexibility.

Original source: ComputerWorld. Analysis and adaptation by ForgeNEX.