Cisco Systems (NASDAQ:CSCO) knows that the hardware technology world is quickly shifting to software and analytics. But it also knows that it can (possibly better than anyone else) sell new server hardware to be paired with superior software and services.
That's why the company released its new Tetration Analytics platform this week. Cisco is looking to merge what it knows (hardware) with the future of computers (software and services).
Tetration acts like a time machine for data centers, allowing companies to both go back and view server policy changes, see information flows, find bugs, and also go forward to see what will happen if a new change is introduced. The system is comprised of both hardware sensors and machine learning software that can analyze information in real-time.
Tetration's hardware and software go on sale next month, but the company will also launch a services element that will provide optimized analytics and support later on. Pricing for the system will be around $3 million, according to ZDNet.
How this fits into Cisco's future
The release of Tetration fits nicely into the vision that Cisco's CEO Chuck Robbins laid out back in March. You may recall that Robbins reorganized the company into four main categories -- networking, cloud service and platforms, security and, applications and Internet of Things. In the email that went out to employees at that time, Robbins said, "We must enable our customers with intelligent, analytics software platforms that take real-time insights from their networks through their end-user experiences to drive actionable business outcomes."
That sums up pretty nicely what Tetration Analytics does and goes hand-in-hand with the company's focus on building up its software and services revenue.
This is important because Cisco knows that the worldwide business intelligence (BI) and analytics market will be worth $16.9 billion this year. Cisco is offering a solution where companies can manage their own analytics -- what Gartner (NYSE: IT) calls "democratized analytics" -- but is also offering advanced services that customers could pay Cisco more money for.
How much does this really impact Cisco?
It's hard to tell right now exactly how much of the nearly $17 billion analytics market Cisco could take, but I do think the company is certainly moving in the right direction.
Cisco isn't in immediate danger because of the growing software and services market, so it can transition (somewhat) slowly into that role while still making most of its money from sales of its network switches. It's also worth noting that Cisco already has a successful services business, which comprised 26% of the company's total revenue last quarter. Tetration Analytics is yet another step in building out an even stronger services foundation with a focus on analytics.
Cisco has 25,000 employees and has spent decades focusing on hardware sales. Introducing new platforms like Tetration is one of many small steps toward the company's future -- but investors will have to be patient to see them pay off.
Chris Neiger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Gartner. The Motley Fool recommends Cisco Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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