Cisco, the network giant that has flourished for decades in the sale of expensive hardware, is moving toward the separation of some of its leading software for use in low-end switches, reported the newspaper, citing two People familiar with the company's plans.
The new operating system is called Lindt and its goal is to prevent customers from moving to network companies like Arista Networks and Juniper Networks, whose software can run on so-called white hardware, according to The Information.
The measure could adversely affect revenues and profit margins for the Cisco switching business, the company's largest revenue segment. The risk is that customers simply purchase Cisco software without the higher margin equipment and use cheaper boxes. During the year ended July 30, 2016, the Cisco switching segment generated revenues of $ 14.7 billion, or 36% of the Company's total.
Like all existing technology providers, Cisco is under pressure from cloud-based vendors and software-based infrastructure companies that give businesses improved tools and functionality without forcing them to buy expensive hardware.
