- Cisco’s internal incubation unit seeks to fail fast with ideas that don't work and scale those that succeed
- Panoptica, a code-to-cloud security platform, is a big success story
- Cisco faces declining revenue, reorganization and layoffs
The pressure is on for a little engine driving the big idea train at Cisco: an internal incubation team called Outshift. Its job? Quickly determine which emerging technologies Cisco is — and isn’t — good at addressing.
Outshift is the team behind Panoptica, the company’s code-to-cloud security platform that made its debut last June. Now, the team is focusing on artificial intelligence (AI) and quantum computing.
In the face of the company's fiscal Q4 2024 earnings, during which revenue fell 10% year on year to $13.6 billion and profit plummeted 45% to $2.2 billion, Vijoy Pandey, Cisco SVP and head of Outshift, has a lot of weight on his shoulders.
It’s no secret that the vendor is facing a pivotal moment. The company just announced an internal reorganization and plans to lay off 7% of its workforce.
Asked about Outshift’s potential effect on company losses, Pandey told Fierce the notion of a P&L sheet doesn’t extend to his division because Outshift’s contributions aren’t measured in revenue. Instead, the division helps develop Cisco’s credibility in new areas and its performance is measured on customer and user numbers around its products. Based on those numbers, the company decides where to place big bets.
“We will not get into markets that are mature. If there is a mature market that Cisco wants to get into, we will go ahead and acquire a company or two or three in that space,” Pandey said. “We are clearly in the emerging tech space where the technology itself is evolving, it might be interesting to Cisco and we might want to take a bet.”
Betting big on AI
So, where might Cisco bet next?
On the AI front, Outshift is looking at building agents that can solve problems in security, networking, observability and collaboration. It’s also looking at building horizontal infrastructure that these AI agents can sit on top of and communicate with each other securely and observably.
As for quantum computing, Pandey said Cisco isn’t looking to build a quantum computer, but instead “provably quantum-safe security solutions” that can span both quantum and legacy compute systems.
In order to have a fighting chance in these nascent markets, “we need to be at the starting line like everybody else,” Pandey said.
Scale matters
Panoptica is an Outshift success story, but there are stories of failure too, according to Pandey. Calisti is an example.
Calisti is a service mesh manager Cisco developed to oversee cloud-native microservices and applications in a hybrid multi-cloud world. The tool was introduced as a free service two years ago, about the same time as the early access version of Panoptica. But unlike the latter, Calisti never made it to general availability. Cisco pulled the plug because there wasn’t a clear trajectory for the product to scale to a sufficient size, according to Pandey.
“Scale matters. It needs to be a meaningful business for Cisco,” Pandey said. "For us, it needs to grow towards hundreds of millions of dollars — in fact even a billion dollars — and there needs to be a clear path even though we are not there today.”
Both AI and quantum make sense as lucrative targets from a financial perspective. Various forecasts predict the AI market will hit $632 billion by 2028 and as much as $1.3 trillion by 2032.
And Boston Consulting Group recently predicted that “quantum computing will create $450 billion to $850 billion of economic value, sustaining a market in the range of $90 billion to $170 billion for hardware and software providers by 2040.”
To take advantage of these markets, the Outshift team needs to act fast.
"We need to land something between now to a year [from now],” Pandey said of AI. “Same thing applies to the quantum space.”