 From theCUBE Studios in Palo Alto in Boston, connecting with thought leaders all around the world, this is a CUBE Conversation. Hello everyone, special CUBE Conversation. I'm John Furrier here in theCUBE. I'm not in the studio, I'm at home. We're sheltering in place. The studio quarantine crew is there. We've got a great guest here to break down, the analysis and the tech industry, Zece Parvala, who's the principal of ZK Research. Zece, great to check in with you for our check-in. Last time we chatted, you broke down the entire industry. Lot to talk about now. We had the Cisco earnings just came out and a lot of other great things are happening. Thanks for joining me. What's your take on what's going on? Yeah, thanks, John. It's been sort of a tumultuous last few months. I think one of the takeaways I had from Cisco's earnings actually was that it's not as bad as people think. I know if you read a lot of what's going on the media, we get everything from dooms day and the world's ending or whatever, but I think what Cisco's earnings showed and Cisco, I know they have a lot of enemies and a lot of competitors out there, but they're really still a bellwether for the industry and so everyone should rejoice in the fact that they actually had a pretty good quarter. I think what was telling about that was security was up, the services business was up, the margins were good and what that shows me is that there's still room for innovation. Customers are still buying things and they're willing to pay for things that actually helped drive their business forward and so Cisco's put a lot of energy into their services group to make sure the customers are able to adapt their technology and change their business. So from an overall market perspective, Cisco is, their quarters are shifted from almost everybody else's and so they're generally a leading indicator of where things are going. So I think the fact that they showed some strength, they guided up from where the street thought, I think that's a good thing for the entire industry and I think, I'm not saying we're out of this yet, but I think businesses are starting to spend money where they need to in order to put themselves in a position to come up strong after, well once we start going back to work, whoever knows what that'll be. I think the other sort of interesting pivot here is that I think the overall role the network has changed within companies, right? We've covered networking technologies a long time. It gets a little bit of interest sometimes from C level, certainly not as much as it should from CEOs and CIOs. A lot of people think of it as the plumbing and the pipes. I don't understand, it's a very complicated technology sometimes, but when you look at what's happened with digital transformation initiatives and now with COVID, we've got more people working at home, we're adopting cloud services, we're using video, we're connecting more things with IoT initiatives. So the overall value of the network has increased and I think that was also reflected in Cisco's numbers. I think this transition had started when you look at a lot of the building blocks and digital transformation, IoT, cloud, mobility, things like that, they're all network-centric in nature. And so for the first time in history, I think business leaders actually need to look at their network strategies because if that's without a sound network strategy, as we sort of come out of this and the companies that have a good one will be able to really step on the gas and do what they want with their business, the ones that don't, I think are gonna really struggle to survive because they're not gonna be able to do a lot of these advanced things. Yeah, great point. One of the things personal, the new Cisco has a new leadership, the new CEO has been in place for a while. Cloud-native is a positioning they're going after and with the COVID crisis, it really puts more pressure not to move with the network because it's a core staple of an organization. Yet the transformation journey is going to be accelerated. This gives Cisco, this is a lucky strike for Cisco because you're going to move packets around and the multi-cloud conversation comes in and the enablement of application development. All being tied to the network is what Cisco's been preparing on and this has kind of been a nuanced point that not everyone understands but coming out of COVID to have a growth strategy if you're not programming up and down the stack with DevOps and NetSecOps or whatever you want to call it, people working at home, a new perimeter has now emerged, that's everything. Yeah, everything is a perimeter. This is a tailwind for Cisco, your thoughts on that, your opinion. Oh yeah, the big time tailwind for Cisco. I think what's happened John, when you look at network evolution over the last five years, we can do much more with our network. That's come at a cost and that cost is complexity. So trying to tie all these things together, SD-WAN, SASC, Data Center, SDN, right? We've got Wi-Fi 6 coming, we've got 5G coming. So we've got all these great things that we're going to let our networks be faster than them before and run applications we could never run before, right? You look at some of the demos on 5G, we're able to wear untethered Wi-Fi virtual reality headsets, completely creating completely new shopping experiences, educational experiences, but you need a lot of bandwidth with that. But not only do you need bandwidth, I think the one thing that COVID has taught us is if you have any weakness in the network, anywhere, right? From the user's hand all the way to the cloud, that weak point gets big time. And so now you have to start thinking of your network, not in pieces of having a campus network, Wi-Fi network, data center network, and have a single network, right? And so Cisco's really one of the few companies, maybe the only company that can actually deliver that end-to-end network that starts in the company, extends to people's homes, goes out to the cloud. And what they've done masterfully under Chuck Robbins is they've been able to pile those things together to create a much simpler way of operating this complicated network. So you look at what they're doing with ACI and intent-based networking, what that is is you can think of it almost as a software overlay that masks the complexity of the network that's underneath it. Yeah, I've always been talking about Cisco over the past decade and a half. Got to move up the stack guys, you got to move up the stack. This has been, this is now their opportunity and with multi-cloud on the horizon or here, this is going to give Cisco a path. But I got to ask you, what is your take and advice to Cisco when you're out there talking to them, you're talking to the customers all the time and practitioners, you're the analyst. What do they need to do better? Because you can't just wish multi-cloud upon the marketplace, it's coming, but it's clearly not the use case yet. So there's a time lag between ACI and intent-based networking to true multi-cloud. What does Cisco do in the meantime? Yeah, well, I think what Cisco has to do is think about what they're doing with ACI and multi-cloud and actually help their customers implement it in pieces. And the description I've used is the path Cisco's on and the path customers are on actually in this world of you think if the end state is true hybrid multi-cloud, right? We have to get there in chip shots and not moonshots. And what I mean by that is if you were to say to a customer, this is your end state, right? The path to get there is so daunting. It's like a moonshot that paralyzes the customer. If you break this down into a set of chip shots, that gets much easier. So put the infrastructure in place to be able to just have the visibility across your cloud. Then maybe automate movement from private to public cloud. Then automate some of the processes that give you the most headaches. Then move to a bigger automation framework, right? So areas like security, network configuration, right? Things like that. Those are very difficult for customers to do manually. Those are the things they should be automating today. So what they want to do is almost take their intent-based network almost as a lighthouse to road to, a visionary state, and then help customers get there in pieces. Because if they try and rush them along too fast, I think they'll lose the customer because the complexity is too high. The other area they should really be focused on is continuing to mature the services business. I think that's something under Chuck Robbins that's night and day different than what it was. The services business to Cisco prior to Chuck was a lot of breakfix. Their tack is well-renowned as being a great tack. But now they've gotten more into pro services. They've gotten more into adoption services. And I think the more subscription they sell, what Cisco needs to really understand is that customers tend not to renew things they don't use, right? So making sure that the services group helps customers and use the things that they're paying for. And that'll pay dividends for them, multiple dividends for them down the road. I want to get the Silicon one on that opportunity to upsell and do a refresh because hardware refreshers are not going to be on the docket early on unless there's business value. So let's hold that for a second. Sean Chambers has been on theCUBE recently in his new role as a coach and investor. And he said to us on theCUBE, transitions versus transformation. Cisco and the big companies are expected to win the transitions. But now with COVID coming out of this, there's real transformation. So you got to look at things like collaboration. Hey guys, get it better. This is not just win the enterprise with the better WebEx. Zoom is thick and ass. Teams is out there. So Cisco has a huge collaboration piece and a bunch of other business. So where is their transition wins and where's their transformational opportunity in Europe? Well, I think the entire company is kind of going through transformations, right? Even on the network side. So it's like, the industry's been calling for Cisco to get commoditized for years, right? And if you look, their product gross margins are actually the strongest they've been in a decade. So I remember when I fell below 60%, everybody thought the world was falling. This quarter, I think it was a little over 65 on the product side. And so my belief is nothing's really a commodity if you can drive innovation. And that's what Cisco's been doing. So from a transition standpoint, I think they've done a lot of that. They've transitioned the company to software and services. They've transitioned the company more to a current model. They've actually decoupled software from the hardware so customers can buy differently. And you brought up the fact that we may not have a hardware refresh, but that's okay. As long as they keep the software and new cycles going. Where the transformations has to come is completely changed the dynamics of how something works. And so within 10 base networking, you think of the old way that a network engineer used to work, like the way I used to work when I was an engineer, a lot of hunting and pecking at a CLI, doing a lot of cutting and pasting and using homegrown tools. That doesn't scale anymore. My research shows that on average, it takes companies about four months to implement a change network-wide, far too slow for digital companies, right? What Cisco's done is they've accelerated that by letting customers automate more things. And so for the Cisco, the transformation comes in allowing customers to do new things. I think you're right in the collaboration side, there's more work to do. Nobody's got a bigger collaboration portfolio than Cisco. They got endpoints. They got room systems, right? They've got software, they've got cloud on-prem, but they got to take that and tie it together. I think the other area that Cisco needs to improve is they've got a lot of management tools that look at different things. They have FD, ACI manager, and a whole bunch of different security consoles. In fact, I poke fun at them sometimes and said that the market leader in single panes of glass because they have more than anybody. Right? I think eventually they gotta be able to tie that information together and help customers understand what it means from a cross-domain perspective because they still build their products wireless campus data center. But as I mentioned before, we just have one network. And so Cisco can aggregate this data up, apply machine learning to it and help customers what that means. They see insight across the entire network. That would really be powerful because they've got the footprint. Now they just have to be able to deliver the machine learning-based insights to help customers understand what that data means. And they have a unique opportunity in the short-term. No one's going to be kicking Cisco out anytime soon. No, I think they're in closure. There is safety in using the big companies. I think what Cisco is able to bring is a level of financial stability that other companies may not have. And so they can weather the storm for a long time. So it's easy to say going to Cisco is the safe bet it has been for a long time, but I think it's also the smart bet. I think they're able to continue to invest in things where maybe smaller companies won't be able to. Yeah, my question on Cisco, a big fan of their strategy have been vocal about that for a while. My question on Cisco, I'm going to be critical, is to say how fast can you get that development going? Show the software value in market. Show customers a growth trajectory that they can execute on, taking advantage of the network policy intelligence. If they could do that, they're going to be in good shape. You agree? Yeah, I think one of their challenges though is the transformation of their customer base too. And that's where the work Suzy Weesman doing on the DevNet team is so important. Like if they were to shift their whole strategy over to developer focused software today, I think that would largely put them in a position of trouble because the engineers that work with the stuff and the resellers that work with the stuff aren't, they don't really have the skill sets to take advantage of that, right? So last year Suzy, we, she really talked a lot about the growth of DevNet. This year they came out with, in Barcelona this year, they came out with a bunch of certifications for DevNet. Now they're actually coming out with a number of partner certifications as well. So the resellers can get certified. But I think it's important that they continue to push their engineer base into gaining these new skills. I'll give you an interesting data point for my research and that's that only about a quarter of network engineers has ever made an API call, right? And so you look at all Cisco's new year, it's all API driven. And so if you want to do something as simple as say, get all the IP addresses in your network, you can just use an API call for that, right? The other way to do it is you do a show command in the CLI and you screen scrape and you take a visual basic script that you parse it, you know, and you get it that way, right? So the API methods, using those is a lot easier. And so I think Cisco's got a good strategy with DevNet, they've grown that base a lot. It's still relatively small, you know, it's under a million people. When you think of the overall size of the Cisco customer user base, that's where they got to put some effort, right? More and more effort into driving adoption to DevNet. Well, I think you're smart on that. I think your research, and they must be listening to you because they haven't really tried to jam that down their throats. They've been very humble about it. And I think a million is a pretty damn good number, I think, for the Cisco. Again, to your point, they're bringing people into the water, the low end first before you go to the deep end. So swim with the bubble, if you will. Well, I think what worked with DevNet, what they did was they assumed the engineer had no knowledge of software. Because I think at first, when they put a lot of the programs in place, they assumed people would have some knowledge of how to code, right? And I also think the industry did them a bit of a disservice. We used to, there was a lot of stuff written in the media how every network engineer needs to become a software developer. Well, they don't have to, some are going to become software developers, but they at least have to become software power users, right? So do your job through software, but you don't have to be a developer. And that's where DevNet really, when it really matured, is that diverge down two paths. Developer, engineer, here's your common software skills, and then you break down as a specialist after that. And so they've actually helped with the maturity of that. They've changed their certification programs to reflect that. And I think DevNet really is a big key. And if they can transition that engineer base, then it helps the adoption of the new technology. Zeze, I want to get your final thoughts on this segment on multi-cloud. Obviously, it would be a really great win for it creates some interoperability, especially with the network intelligence. Cisco could bring to the table and others. You got some startups out there like AVA Tricks and others and VMware with NSX, trying to get the, where the security fabric, a lot of action going on with multi-cloud and networking. Your thoughts, what is your research value? What's going to transpire? How do you see that market playing out? You know, my research shows that a little 80% of companies prior to COVID had multi-cloud on the roadmap. And I'm assuming that's gone up. I haven't actually done a survey since then. I think it's funny, COVID exposed a lot of things from a lot of vendors, right? And I think one of the things it did is it showed cracks in the cloud. You look at some of the data and how many outages Microsoft had, Google had some screens. AWS has held up pretty well under the strain of a lot of the higher utilization from COVID, but they've been building a lot of capacity into theirs as well. So I think from a customer perspective, it makes sense. You don't want to put all your eggs in one basket. Some cloud providers are stronger in some regions. They each have different, their own different cloud platforms, the private cloud platforms. And the problem is, is if you decide to go multi-cloud, you can't use the cloud provider's tools, right? So if I use an AWS load balancer, that works great in AWS, but it's not going to help me with Azure or GCP. Similarly, if I use GCP tools, I can't extend that out to Azure. So something needs to connect those and be able to tie security and policy. And that's where multi-cloud comes from. And you're right, there's some good startups there. I think the difference with Cisco this time versus the SDN world was when SDNs came about, I think Cisco didn't want that to happen. And I think they actually actively worked against SDN. And I've talked to Chuck Robbins about that. He said, you'll never ever see Cisco do that again. If something's good for the customers, they want to lead that transition. So Cisco's been very active in multi-cloud. And given they've got the install base already, I do think they will help bring this along, but there are some good startups in it. Yeah, it's interesting. SDN really wasn't ready for prime time, even when VMware bought Nacera. Hey, wait a minute, it was still there. Didn't have a lot of revenue. It had neutral, but I mean, they made a good deal. VMware claims that's the saves NSX was saved by SDN. Some people say it was completely rewritten. Final thoughts on outlook that you see coming out of COVID. Obviously, it's been well reported. We've been reporting the VPNs have been under provision. That was a blind spot, a lot of blind spots and disruption that wasn't forecasted in the classic sense. There was no hurricane, there was no flood. It was a COVID, invisible disruption. Yeah, and there's no hand-pasted either, right? Like even with when you think of what happened with the floods in New York in 9-11, people knew that they'd eventually go back and so business continuity and disaster recovery was a temporary thing. Can I set up a data center to work for a couple of months so I can go back to New York? That's not the case with COVID. We're trying to manage for an undefined endpoint which is extremely difficult from an IT perspective. I do think that COVID again has highlighted the value of the network. I think we'll see a lot of transition from VPN to SDN. I think that's certainly good. I think the rise in video will also cause a Wi-Fi upgrade cycle where people get back to the office and I think you'll see a lot of focus on programmability and agility because I don't believe we're gonna see everybody return to the office with one big bang, John. I think what we're more likely to see is the future of work to be almost like when you and I were in college. We do a bunch of stuff at home. We go to the campus when we have classes and when we wanna meet people. Similarly, we'll go to work when we have meetings and then in between meetings, we'll go find an open place to work but in general, we'll do a lot more work from home. In fact, my research shows 93% of the business leaders I interviewed said they expect to see at least a 30% increase in work from home post COVID, right? So we're gonna have a lot more people doing that but it's not gonna be everyone working from home and everybody working in the office. It's gonna be a hybrid of the two people are gonna come and go and that drives the need for agility and today's networks really aren't that agile. And so I do think- And back to school. I wanna go back to college. We do Thursday happy hours too. I mean, have the whole week. I'll meet you there. I'll meet you at the studio. Based up, based up. Final point, you mentioned SD-WAN. I was talking with Dave Vellante and Stu Miniman just last week and I said, you know, this SD-WAN today is not your grandfather's SDN. Meaning SD-WAN has changed a lot. It's basically the internet now. So what's the modern update definition of SD-WAN? I mean, it used to be you connect to a wide area network, you connect from campus, you do some networking. What is it now? What's the same name? But it's, you know, what is it? What's coming in- It can happen. It can happen in maturity of the technology. If you look at the adoption of anything, right? The first wave of stuff is to make the new stuff look like the old stuff. So when we put VoIP in, we made it look a lot like TDM. When we had cloud, we lifted and shifted and we didn't really change our apps. And then we eventually get smart and think, what can I do with the new thing that I can't do with the old thing? And so a lot of early SD-WAN deployments were simply just replacements for MPLS and they were put into save a bit of money. But now companies are getting smarter and they're thinking about, what can I do with my SD-WAN that I couldn't do before? So there's a lot more tighter integration security. I think as companies put SD-WAN in and think about what the WAN is today, John. It used to be corporate offices and data centers. Today it's everybody's house, right? And so being able to extend your WAN out to single people, out to planes, trains and automobiles, if you remember that movie. Those are all getting connected as well. People's backpacks, fan kiosks, those are all becoming WAN endpoints, right? So that's where you need to embed more security in the network. And so I think that's a transition we're seeing in the SD-WAN and I think that the technology is matured to the point where it's getting easier to deploy, faster to deploy and you're right, we can use the internet for transport in some cases. Some will still keep, there'll still be a lot of MPLS out there. But I do think we wind up in this hybrid world, but clearly the time has never been better for SD-WAN. And I think we'll see a huge growth curve for that because it's the only way to extend the WAN to people's homes, the things, the cars and really anything that's connected. You know, that's such a great point. And I think this is a real nuance in the industry. It's a whole nother rebirth of the category because the aperture is wider, you got policy, you got reliability, you got security built in. This is key to the HSOV key. The whole concept of AI ops becomes real because we're collecting data and we're able to use AI to automate operations. So as we call it SD-WAN 2.0, that's what you got to do. We got to make an acronym out of this. Come on, we can't just call it SD-WAN. It is SD-WAN 2.0 because it's the second wave of it we're actually thinking about how to transform our company. So the John Chambers Court of Transition versus Transformation is apropos because like I said, a lot of the waves that Cisco went through early on was we transitioned the market and then we transformed, right? And so SD-WAN so far has been transitional, moving away from the old thing, but now it's time to transform the way our entire network operates. There's great insight. Always a pleasure to talk to you. You've got the straight scoop and signal right there from all the noise in the industry, now more than ever, people are going to be focused on critical projects. So thanks for your insight. ZK, research, great stuff, and we'll keep calling you in. Great guests, thank you for coming on. Thanks John, always a pleasure. Okay, keep conversation here remote. We're doing our part either at home in the studio, quarantine in. This is theCUBE virtual. Virtualization has come to theCUBE. We'll do whatever it takes to get the content out there. Zece, thanks so much for coming on. Appreciate it. Thanks for watching. I'm John Furrier.