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Cisco Plans to Sell Networking Software Separate From Hardware

Cisco Systems is making the software operating systems for its networking routers and switches available as standalone, subscription-based products, letting them run on non-Cisco hardware for the first time. This is a major strategy change for Cisco, which previously only sold its networking routers and switches bundled with its own hardware. It portends a potentially significant shift in Cisco’s business relationships with some of its largest customers, such as telecommunications carriers, which are starting to design their own networking devices using less expensive hardware from Asian “white box” manufacturers. By separating its software from its hardware, Cisco hopes to keep these customers from defecting to rivals like Arista Networks and Juniper Networks, which already offer software that runs on white box devices. While separating software from hardware could hurt Cisco’s profit margins on switches and routers, it fits with CEO Chuck Robbins’ broader push to increase Cisco’s revenue from software subscriptions.

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