Hello everyone. Welcome to the Cisco Networking Solutions for Service Providers Tech Talk, hosted by Barclays. Please note you've been muted. Should you have any questions, please submit them using the Q&A panel at the bottom right of your screen. I will now hand it over to Sami Badri, Head of Investor Relations.
Thank you very much, Heather.
This meeting is being recorded.
Thank you very much, Heather, and I want to welcome all the investors and analysts onto this call. So, you know, we're at Mobile World Congress Live here, and I just want to welcome everyone, especially with JD, our Head of Networking, and Tim Long, Senior Analyst, covering IT hardware and communications equipment at Barclays. Jonathan will be giving a presentation, after which there will be a Q&A session. If you have a question, please enter it into the Q&A panel chat box, which can be found at the lower right-hand corner of your screen. Before we begin, I'd like to remind everyone that today's call relates to Cisco's networking business, and that no new financial information regarding Cisco's overall performance is intended or implied.
We may have forward-looking statements which are subject to risks and uncertainties outlined in detail in our documents filed with the SEC, including our most recent filings of Form 10-K and 10-Q. Actual results may differ from statements made today. With that, let me turn it over to Jonathan.
All right. Well, thank you, Sami, and thank all of you very much for joining today. Really appreciate the time that you are giving us. I wanna go ahead and start moving forward on a few of these areas. Sorry, we're just kind of having a little bit of echo. I'll make sure we're muted here. Really want to share with you... First of all, it's great to be here live at Mobile World Congress. A lot of energy at the show, a lot of great customer meetings.
And also, you can tell from the slide, we have something we've been sharing with our customers this week, our investors, analysts, and press, around how Cisco is helping to buy and secure, networking, I should say, for all of our customers at every single scale, how we're using the power of AI to go and do that. This is Jonathan Davidson. And people I know call me JD, so feel free to call me either one, but I respond to almost anything. There's a few trends that are happening in the world today that I think we're all aware of. The world is more connected now than it has ever been.
In fact, there was a new GSMA report that showed that by 2030, we're gonna have 6.3 billion individual mobile connections, and 5 billion are going to be 5G. So we're definitely seeing not only an acceleration of people to the mobile infrastructure, but we're also seeing a significant expansion of things and connected devices as well. All of this connectivity is driving an increased demand for greater experiences, and so that is pushing the need for additional data processing closer to the edge, and that's been part of our service provider carrier strategy for over six years now, around how we can help make sure that the infrastructure of today is ready for more data needs, consumers, applications, and things of tomorrow.
When we think about what our goal is in Cisco networking, it really is focusing on, on three key things. One, there's no point in secure connectivity. Second, we know that applications are continuing to be written in new ways. You might have your database on-premise, you might have your front end of your application and multiple public clouds. That is making it more complex for the people who are operating and managing outcomes for their business. We want to simplify that experience for them, not only to manage their infrastructure, but to help drive to the outcomes that every business needs today. Of course, you have to be able to do this at scale, and that is something that Cisco is extremely well known for.
I'd like to say that if my daughter and I wanted to make a dozen cookies, that would be pretty easy. If my daughter and I wanted to make 100,000 cookies, that could be a problem. So, we think applies to networking infrastructure. Now, if you think about what we're doing from a Cisco networking perspective, last June at Cisco Live U.S., we announced the Cisco Networking Cloud, which is our vision for how to accomplish that goal of simplification and being able to deliver every scale to every customer across the world. And we're across three different places in the network. So you have the enterprise connectivity, both your campus infrastructure, your branch infrastructure, as well as your wide area networking. So for large, right, for large enterprises, they actually build out their own wide area network.
And we're also have continued to see tremendous traction in industrial IoT space with the continued build-out of, of factories or the digitalization...... Okay. Now I can go. All right. Hopefully, everybody can hear me now?
Yeah.
Okay, great. Thank you. Apparently, I lost you for 10 seconds. Sorry about that. I think I lost you right when I was talking about carrier connectivity and how we're working at this, at this show, specifically at Mobile Congress, to talk about how not only can we help them with their existing infrastructure of routing and optical, but also how they can generate net new revenue with enterprise connectivity as well as mobile IoT. We are now at 250 million mobile IoT connections, a lot of those being connected car around the globe through 60 different carrier partners.
Across the entire portfolio, we have a tremendous amount of capabilities around AI that are used to help our customers understand the status of their experiences and how they can go and and rectify any potential problems that are there, and also propose changes to their infrastructure, both from a predictive perspective as well as from a generative AI. We'll talk, we'll talk a bit more about that. People ask often from a Cisco Networking Cloud perspective, what can our customers expect? If this is a vision for both cloud-based networking infrastructure, and how we're gonna manage infrastructure from the cloud, but also our vision for how they're gonna get a similar common experience if they decide to stay with on-premises management, which some customers do, for their own security reasons or potentially for regulatory reasons.
And so we are going to continue to support our customers in both of those models. But what they can expect from the Cisco Networking Cloud is, first of all, a unified design framework. So regardless of where, whether you're using our cloud-based products or on-premise products, whether they're networking products or security, observability products from Cisco, you are going to get a common look and feel, and we have been working on this for the last couple of years. And if you've used any Cisco products recently, you will see that they are looking more and more similar over time. We wanna make sure that that continues.
The second part that we get is, the ability to help our customers understand the true end-to-end view of their applications, how their users are experiencing them, as well as ensuring that all of the things that are attached to the network are accomplishing the mission that it needs to. Whether that is a coffee machine that needs to report how many, cups of coffee it made, or whether it's a nurse that has a handheld that needs to be able to get access to the infrastructure to, be able to get medicine released so they can deliver it to their patient. All of these things are critically important, and we have the capabilities, the technology, as well as the data sets to enable that, not only the visibility, but also to generate insights and action out of that data.
The third thing, our customers have a tremendous amount of different domain knowledge and domain expertise. Whether these domains are in the campus, the data center, the branch, the wide area network, or through the last mile, our customers want to be able to drive workflows between each one of these various domains and do that in a consistent fashion. And that is an additional capability of the Cisco Networking Cloud. And then finally, there's a networking domain, and there's a security domain, and in some customers, in fact, the majority of our larger customers, these domains are actually moved into the political structure as well inside of those companies. But one thing they continue to ask for is the ability to have common policy across both security and networking. That is additionally something that is being delivered through the Cisco Networking Cloud.
So we're really excited about where we're going. We think this is very revolutionary for our customers, and we could not be more excited about where we're going. What I'm then asked by many is: Well, you talked about a networking cloud, you talked about a security cloud. Does this mean there's two clouds? And how can this operate as one if it's two clouds? Well, that is the power of the cloud. We have a lot of deep linking, as well as a common look and feel, as well as a lot of API sharing between these different clouds, which means that you can go and provision your security assets, for example, SASE, through the Cisco Networking Cloud.
We also take capabilities from our security portfolio, for example, the firewall, and we embed them into our routers, which you can then provision through the Cisco Networking Cloud. So we're really focused on customer personas, segmentation, and making sure that we create a very simplified experience for our customers so they can get the outcomes that they need. They want connectivity, and they want security, and they want it done simply, and that's our key focus. Now, moving on to the service provider environment, they want exactly the same thing. They have generally a much larger scale. They have a need to simplify their operations, and they also have a dramatic need to be able to transform their networking infrastructure due to the continued growth of bandwidth requirements.
For many, many years now, on average, we've seen the core infrastructure growth be around 30%, give or take. On top of that, what we have seen is that the complexity of that infrastructure continues to grow, and this is where we have proposed, and many of our customers have started to adopt new architectures, which help them save up to 50% CapEx and 50% OpEx. Then on top of that, IT globally takes anywhere between 2%-4% of the global energy footprint, and there's a potential for AI to double that. So there is a great need for us to accelerate sustainability. And in fact, just yesterday, we signed an MOU with Orange, here in Barcelona.
Orange is one of the top providers globally, and we are very aligned, aligned around helping to reduce the number - the amount of greenhouse gas, by, by not only achieving Scope 1 and Scope 2, but jointly being able to achieve Scope 3 by 2040. And, and of course, we can talk more about, about where we're going there. Now, I talked a bit about this architectural change that we see happening. We have almost 100 customers that have deployed this routed optical network architecture. And if you go back to 25 years ago and more, all of the data networks rode on top of the voice or TDM network.
And what we have seen over time as the cost structure for IP routing has evolved, that it made more and more sense to put the other technologies on top of the data infrastructure. So we started off with voice over IP, so IP went on top of the data infrastructure, and then we started taking other TDM technologies and put it on top of the IP infrastructure. In fact, now we are actually able to take lambdas and put lambdas on top of the routing infrastructure. And what that means is you can now have a single flat architecture that is router-based, that enables you to have a tremendous amount of CapEx, OpEx, and total TCO savings.
And not only do we have near 100 customers deployed on this technology set, we have close to another 200 customers that are either in proof of concept, in trials, or in the process of moving down that path. So we are very excited about the adoption, and not just for the traditional carrier space, but we also see the hyperscalers moving up towards this in a very rapid fashion. All right, so I talked a bit about where we're going. Here is a list of various customers. Obviously, we've got almost 100. We have, it says here 93. I'd call that almost 100. And here's a list of a few of the customers that are going down that path.
What I could also share with you is the vast majority of hyperscalers are also moving down this technology path as well, and using the key elements of ZR, ZR+, and Bright ZR optics plugged into routers to be able to go do this. Now, there's a few key inflections that have enabled this to happen, the first of which is a leadership position as it comes to silicon, to dramatically reduce the cost of silicon-based routing. So that's part one. The other thing that enabled this to happen is the focus on Digital Coherent Optics. So being able to move into a pluggable optic that could fit directly into your router, that in the past would have been a relatively large transponder.
And this means that you can actually remove or not deploy transponder-based shelves, which would have to have their own lifecycle management, their own upgrade cycle, and would consume their own power. So this consumes significantly less power and also dramatically reduces the number of elements you need to manage inside of your network. And we just did a press release with Colt just a few weeks ago, and based upon their analysis, they showed that for certain parts of their infrastructure, they were able to get up to 97% power savings because of moving from older routing technology to newer routing technology, and also being able to remove elements from their infrastructure. So a tremendous amount of proof points on top of that.
Also, in a slightly related press release, we announced that we have been able to deliver 800 Gb per second on a transatlantic cable, in partnership with Microsoft. We all know that with the explosive growth of not only cloud, but of AI, that there is an ever-increasing amount of bandwidth required. And this showing the transmission of 800 gig of over 6,000 km is a key data point to show not only that we have market-leading technology, but that it is available and ready to help those who have not only subsea cables, but metro infrastructure and long-haul links across the various continents.... So we're very proud of that accomplishment.
You might have seen three weeks ago, we also announced a partnership with NVIDIA, and this is specifically about helping NVIDIA take their technology and their technology stack, tying it together with our leadership position around Ethernet networking, automation, and orchestration, and enabling enterprises to push the simple button as it relates to deploying GPU-based workloads inside of their environment. So we're very excited about that. We expect to do more and more in this space with, with NVIDIA. So, stay tuned for, for additional, announcements in this space. To, double-click a little bit more of that, we actually are going to be part of their, GTC conference coming up in just a few weeks.
And they'll be able to see, my head of engineering, Will Eatherton, on stage with their head of engineering, talking about some of the things in a bit more detail about what we're doing together. So highly recommend you join into to that particular session. But we, we see not only a power in the GPU, but also in the, NVIDIA's AI for enterprise and how you can tie that together with our security portfolio and our observability portfolio to enable customers to understand how their entire data center is operating, and where you may want to use x86 for some AI workloads and GPUs for, for others. So it's been a, it's been a great partnership so far, and, and we expect more to come there.
Shifting gears a little bit, I wanna talk about how we're using AI inside of Cisco and then how that is benefiting our customers as well. What I think we all know is that great AI actually starts with having a great data set, being able to turn that data into insights, and then asset in ThousandEyes, which we acquired 3.5 years ago. We have more than tripled the size of that engineering organization over that time, and they are now embedded into all of Cisco's platforms as part of our networking portfolios, both Catalyst and Meraki. It's been integrated into Webex. We just announced two weeks ago that it's integrated in our security portfolio, and of course, it is integrated into our AppDynamics platform as well.
ThousandEyes gives us millions of unique endpoints, which enables us to run billions of measurements a day, so that we can understand the status of every major public SaaS, every major public cloud, enterprises who have turned it on, as well as the state of the internet. That enables us to detect outages or brownouts. And if you're interested in learning more about that, go to thousandeyes.com/outages, and you can see in real time what's happening across the internet. If you decide to pay for that service, we'll actually tell you which interfaces and which routers are impacted. But if you just wanna see them, that's, that's free. Now, on top of this, we also have visibility into over 1 billion endpoints.
And so I just wanna end here, like great data, plus having a great team that can generate great AI, gives us the ability to deliver just absolutely phenomenal customer, and that's what we're seeing with our customer. So what that customer experience looks like is what we've been calling digital experience monitoring. So I will give you an example that was demonstrated last year with our Webex portfolio. We have an event called Webex One, which we do once a year, and we showed how ThousandEyes was integrated into Webex. And in there, you can type in to the generative or prompt-based interface and say, "How is Sami Badri's quality today?" And it will come back and say, "Well, Sami had four meetings today, and one of them had five minutes of bad audio quality.
Here's the topology of that particular call, and here was the, where the problem of that call actually happened. So that you can very rapidly go and determine the source of the issue and solve for it. Now, I actually think what's really going to happen is that we can be a lot more proactive than that, where we could say, "Hey, 200 users are having a bad Webex experience because a QoS setting on this router needs to change if this is one of your top priorities." So prompt interfaces are great, they're good for helping you troubleshoot, but I think a lot of this is gonna be API-driven, driven by AI in the back end moving forward, and this is something that we see happening over time.
Now, if we move on to where we're heading, if I were to summarize how we're helping our communication service provider friends, we really want to help them, not only by providing a trusted partner, but also by helping them deliver unified experiences everywhere they touch their customers, and being able to do that in a trusted manner. We see that there is a desire and a need and a capability for the CSPs to remain relevant, and we see that they are absolutely relevant. They are the experts in global connectivity. They are also asking us here how we can help them generate net new sources of revenue and profitability.
and this is one of the reasons why this platform-based approach around the Cisco Networking Cloud and Cisco Security Cloud is so important, and how we actually have an entire team of people that helps them build out services. We call it our service creation team, and we do that through helping them build out the business cases, helping them build the technology stacks, and helping them go and roll out that technology. Of course, we are helping them globally continue to expand their capacity, and we're helping them to work with us as a trusted partner, and so they can continue to be a trusted partner to their customers. And with that, I think Tim's gonna ask some questions. I'll hand it over to Tim.
Thank you, thank you, JD.
Yeah.
Tim Long here from Barclays. Thanks, everyone, for joining as well. First, I think I wanna sign up to get some of those cookies you talked about. It sounds like that would be a nice benefit here. JD, maybe let's start with some pretty powerful stuff on the routed optical network side there. It's obviously been an industry debate for a long time, and it seems like took a little while to get going. So can you just give us your sense on why we're starting to see that inflection now, and what kind of timing you expect, you know, for this 100-ish customers to really ramp and to become more meaningful of revenue opportunity for Cisco?
Sure. I think this really started about four years ago before we even were calling it routed optical networks. And we started doing this at 200Gb per second. And since then, there's been a few sets of innovation. One has been on the ZR side, so we've gone from ZR plus, now bright optics. And basically what that means is the amplifier is now actually inside of the optic, which means that the launch rate is now more acceptable for broader base use cases. We're now well over 1,000 km as well.
So a lot of the individual challenges or FUD or pushback that the legacy vendors in this space were pushing has been remediated over time, and so now we're at 400 gig with Bright. Obviously, we're gonna continue and move to 800 and more over time. Some of the other elements of pushback was showing that we could actually get the over IP to work. Is, we actually made sure that worked before we even acquired Acacia three years ago. That was, and we proved it out in our lab before we went and made the acquisition because we knew that was gonna be part of this.
So we, we feel good about where, where our technology stack is, and, I don't think there's any remaining FUD that could be put on this technology stack. And if, if plagiarism is the highest form of flattery, I would just say we're in a good space because all of my competitors have now come out with the exact same architecture. They're just calling it something a little different.
Okay, great. You mentioned Acacia there. I did wanna, you know, follow up on Acacia Silicon One. So, obviously, Cisco's made some real advancements and investments in kind of core level technology. So can you talk about how both Acacia and Silicon One play into the strategy, and the product set and the opportunities both in service provider and particularly in the cloud vertical?
Absolutely. Well, a few things. One, we acquired Leaba, which became Silicon One, about eight years ago now, and they did not have a product at the time. 4.5 years ago, we launched the first Silicon One chip. We are now, 4.5 short years later, we now have over 14 different types of Silicon One. We started out at 10.8 Tb, went to 12, we went up to 25. We've now announced our 51.2 T chip, but we've gone all the way down to 3.6 as well. So we have a full spectrum of silicon.
We also, as I think everyone knows, we not only build our own systems with that silicon, but we are very open to selling our silicon, and we do sell them to certain hyperscalers. We also sell them to competitors as well, traditional competitors in the network equipment manufacturing space. So that has been continuing to go very well. It's a key part of our differentiation into the hyperscalers, and even the long tail web customers. So the Silicon One, in conjunction with our ability to build great systems and our ability to have powerful software, is market leading, and that has helped us gain significant wallet share in the hyperscale space. With Acacia, there's a few things.
Continue to be very impressed with that team and what that team has been able to continue to deliver. I have never seen an execution machine and being able to stay on the cutting edge of technology for literally over a decade like they have, and they have continued down that path while they've been part of Cisco for the past three years. We have continued to let them invest as needed to go and continue not only their amazing engineering culture, but also their ability to execute. Just one metric, you know, there's the whole concept of, you know, when you get a sample, or we call it chip to ship, when you get your first sample in of the chip-...
to when you can actually get the product up and running, and I have never seen a team move, move quite as fast as, as Acacia has in that area. They're just a superstar team, along with the, along with the Silicon One team. So great, great things happening there. And so that, I think, is part of the, the adoption that we're seeing in the hyperscale spaces, along with Acacia. And just like Acacia sell, optics as well as, I'll just say modules that people can build their own systems with, we're also going to sell Acacia in the component model as well, like we do for, for certain network equipment manufacturers, i.e., traditional Cisco competitors, as well as we do the component model with certain hyperscalers as well.
Okay, great. That's, that's helpful. Just on one of the end markets, you mentioned we're at Mobile World Congress, a lot of telco here, service provider, and that's been a little bit challenged. So can you talk a little bit about what you're seeing there in terms of what you're expecting in terms of some stabilization in that end market? What do you think is gonna bring us out of this lull, and, you know, what are the Cisco-specific opportunities, particularly in that service provider vertical?
That's great. And we're definitely at the show where we talk about that. There are a few elements. I think we've, on the last call, we talked about... On the last earnings call with Chuck and Scott, they talked about that we have seen a decline in seven of the last eight quarters in the service provider space, predominantly around telco and cable. And then I think there's a few things for that.
One, when COVID first hit, there was a tremendous investment by the communication service providers to really make sure that the last mile was up to snuff to handle all of that, that traffic, that not necessarily was going down to all of our homes, but that was coming out of all of our homes, because that was not typically why, how the networks were built. So there was a big investment that went in during that period. We also saw, during that period, a lot of the, what I would call the high ARPU nations, building out wave one of their 5G, predominantly NSA deployments. And so we've seen a little bit of fully completing those 5G build-outs, so not very many of them have gone to 5G SA as of yet.
There are some notable exceptions to that, and not everyone has rolled out all of the capacity that they have acquired through their governments, and that could be because of government not moving fast enough, or it could be for other reasons. But we certainly have seen, both in North America as well as in Western Europe, it's not accelerating as fast as it could. And then in other lower ARPU countries, we would have expected them to start making 5G decisions, because if you make decisions now, those rollouts would happen in a couple of years from now, and we're not seeing the pace of those decisions happening as well. I think predominantly because the monetization of 5G has not been as expected or as expected by the communication service providers.
So there's definitely more work to do there. We have seen a lot of the people who have invested early in 5G, looking for ways to monetize any of their assets that they have deployed. So if they spent a lot of money on spectrum, they want to utilize that spectrum to generate revenue. So many of them have moved down the fixed wireless access space, and I expect that to continue in certain technology, in certain segments of the market as well. So a lot of great opportunity there as the 5G rollout continues. I think everyone's aware this is a kind of a ten-year cycle, and we are, I would say, three or so years into it.
Okay, excellent. Maybe one more for me for now. You touched on a lot of the data that Cisco has for AI. I was hoping you could talk a little bit about in the hyperscale vertical, particularly, or even in the high-end enterprise, the opportunity for Cisco products, you know, switching, routing. In addition, I think you talked a little bit about Silicon One and Acacia. So talk about where Cisco is gonna play, where are the opportunities? That's obviously a vertical where Cisco was a little late to come to, but then did really well catching up over the last four or five years. What's the next opportunity set? Obviously, backend AI Ethernet gets a lot of attention these days.
If you could just touch on where you think, you know, Cisco is well positioned with its networking products in that, in that cloud AI vertical. Thanks.
Yeah, happy to do that. So I think Chuck has really candid on that we really missed Web 1.0 going back about 14 years ago. But since Chuck has been CEO, this has been a large focus of his. It's been 8.5 years now since he's been CEO, and he has invested heavily in being able to get the right teams together and get the right technology stack together. And so we are seeing some of the fruits of that technology investment period, where we are a sizable business on the hyperscalers. We've been very public that we are in, like, I'll just say four, but you know, could be five out of six, depending upon which, how you're counting, of the hyperscalers globally.
I think people are just in the wide area of the hyperscalers, but in order to get to real volume, you have to be in the production data centers, which the traditional public data centers people are calling that more front end today. So we are very heavily involved and deployed in multiple hyperscalers front-end networks. And having that deployment means that we are in a very good position to win our fair share of the back-end AI build-outs for these hyperscalers as well. In fact, I believe Chuck has also talked on the earnings calls about how we have made significant inroads. In fiscal 2023, which ended last July, leading up to that quarter, we had $500 million in orders.
And then he has also shared that in fiscal 2025, which starts in August of this year, that we have visibility into $1 billion worth of orders and a pipeline that's three times that amount. So I'll let you all do the math and extrapolate what that looks like. But overall, we feel good about continuing to win in the, I'll just say, traditional hyperscale front-end network, and we also are positive in how things are going from a back-end AI.
Thank you, JD, for covering that. We have a question from the audience that I wanted to route your way. First, what is the economics of collapsing Routed Optical Networking from all those layers into a singular layer, which you displayed on one of the slides? The other question, maybe as a follow-up, is: What are some of the use cases, or are there trials right now? Are they in full deployment? Is this going in the metro? Is it going in a service provider routing use case? Maybe you could just give us context on, you know, on the results or the deployments that are coming from this, you know, new announcement.
Great. So, I think the slide right after that slide actually had some of the specifics. So the overall TCO is about 50% lower cost, both OpEx and CapEx. I think it was 46%-47%. And, you know, going back to even four years ago, we had a large carrier that even at 200 gig, when they deployed this technology stack, they actually removed 7,000 network elements from their infrastructure. And they saw that there an increase in capacity, that there was an increase in the quality of the infrastructure. They saw that the overall uptime for their customers was up, and therefore, their customer attrition went down.
So, you know, this just goes to show when you, when you build a simplified infrastructure, there are knock-on benefits, there are follow-on benefits to doing that, that you may or may not expect. And so certainly we expected part, we expected the simplified part. We did not expect that customer attrition was going to go down because of that. But it shows that when you, when you build out this simplified infrastructure, there are definitely a lot of benefits, and maybe some we don't even know about yet. Now, I think the slide also talked about potential customers.
We've got almost a deployments, and there is a very large amount of Coherent Optics are now pluggable, and I think all, all, all market share data shows that we're the number one pluggable Digital Coherent Optic vendor in the world, which is a mouthful to say. I just want to put that out there.
Yeah, Tim here again. Would like to dig a little bit more into the NVIDIA relationship. I know you said sounds like it's evolving, but, you know, pretty big opportunity. Maybe touch on where you think, you know, we talked about AI with the, the big cloud guys. Talk about enterprise. That seems to be part of, you know, what, look, NVIDIA is looking for in this deal. So give us a sense on what you're hearing from, or Cisco is hearing from larger enterprises, and how, how can a Cisco, NVIDIA partnership kind of accelerate, that, that rollout?
Yeah. So I think there's, you know, obviously, when you look at NVIDIA, they're the 800-pound gorilla, so to speak, in the GPU space and software stack as well for being able to build out these models based upon different verticals. And, you know, if you look at Cisco, we are, you know, the number one networking vendor in the world. And so being able to pull these two companies together to create a simplified outcome is what our enterprise customers have been asking us to deliver. And, you know, since...
If you go back 18 months or so, when this kind of first started to get really going, although we've been doing AI inside the company for a very, very long time, if you use it, and, and you don't hear dogs barking in the background, when the dogs are barking, that's AI, and that's been integrated into our products for quite some time. Now, if you look at what our enterprise customers want, they have a data center where they have 20 racks, 40 racks, or 100 racks. And if you think about the operations of that infrastructure, they need to be able to push new images onto the servers. They need to be able to upgrade the data center switches. They need to be able to orchestrate all of these things together.
And if now I'm going to go and add two racks of GPUs, I want to be able to information framework. I want to be able to use the same cloud-based tools to software that I have used for the rest of my data center. And this is where we're bringing these different technology companies together, is, we're bringing the best of our networking. We're bringing the best of our automation and orchestration. And they're bringing, obviously, the best of not only the best GPUs in the market today, but also their AI for enterprise and how that helps them pull things together. And also we have a partnership together with Nutanix, where Nutanix is now sitting on our pricing, on our global price list.
And you can actually even do NVIDIA GPU virtualization through Nutanix. And so there's a whole set of technologies that we're able to bring together to help. I'd just like to say, help our customers push the easy button when they want to get more engaged with these, these GPU-based tools.
Sorry. Sorry about that. Yeah, just another one on the hyperscalers. Can you talk a little bit about their desire for multi-vendor? If you could kind of touch on that on a systems level and a silicon level, 'cause obviously there's a lot of concentration out there at some of these guys, particularly on silicon. How does that work into Cisco's advantages?
Oh, absolutely. Well, one of the big things that we announced 4.5 years ago that I think probably surprised the industry more than we had in a long time was the fact that we're going to work in every business model. Silicon One is not just a radically new technology stack that helps to simplify our customers' infrastructure and has great market-leading performance. But we also announced a change to our business model. Our systems without any software, and we are also willing to sell components. So if someone wanted to just buy the silicon from us and then go and manufacture or work with an ODM to manufacture the systems and put their own software on top of it, we would be happy to go and do that. And we have...
Since then, we have signed up many hyperscale customers as well as some, and that really gives us a leg up. Able to do that as well, and we have a good business there. We actually are now the number three contributor to open source code. Microsoft is the number one contributor. SONiC open source code, that is a software that can support your network operating system to manage those switches and routers. So we're very proud of that achievement. We have our own SONiC distribution for certain hyperscalers who want to move forward with that, and we also have our own tech support team. So if somebody wants to call us for SONiC tech support, they're able to do that.
We fully embrace the open source ecosystem as well. On that, and finally, what we have seen on the model is having a system is still very much a differentiator for us. We are able to go from with Silicon One, top of rack, the first layer of aggregation, the second layer of aggregation, all up to the third layer of aggregation, all the way into the wide area network, whether those be, you know, data center interconnects or peering. The number of use cases supported on Silicon One, with IOS XR, as well as SONiC, is just absolutely tremendous, and that has been very readily received by our hyperscalers.
We're not just in the routing wide area networking use cases, we are definitely in the production front-end data centers, and we have made great strides getting into the back-end AI data centers as well.
Yeah, JD, last one for me. I was hoping you could touch on the Ultra Ethernet Consortium, where it's kind of, you know, rare that you have, you know, Cisco and some competitors working together. What do you think the end game there is, and what is that really going to do for the industry and for Cisco specifically, as you know, Ethernet kind of catches up to and hopefully passes InfiniBand?
... Yeah, so the Ultra Ethernet Consortium is very, very important. Ethernet has always been an open standard that we have been since the beginning of Ethernet, and the company has been around. I think we're gonna turn 40 at the end of this calendar year as a company. And, you know, we wanna make sure that as we move into these AI workloads, that interoperability is still there. Now, you can run AI workloads on Ethernet today at a large- What we've seen is that you really need to have the same vendor, the same silicon, for that entire pod.
And we wanna make sure, as do all the other founders of the Ultra Ethernet Consortium, that we are able to maintain interoperability and open interfaces, because we know that open interfaces leads, which leads to better outcomes for our customers. So we are all in on being able to continue to drive for these standards, openness, and that gives optionality to our customers at the end of the day.
Well, JD and Tim, thank you very much for participating in today's Tech Talk. Sami Badri from IR, and, eventually, when we get this recorded and all set out, we'll be posting on our IR website for everyone to access. I'll hand it over to Heather. Heather might be muted, but thank you everyone for joining us. This concludes today's Tech Talk.
Yes, thank you, Awaz. I'd like to thank everyone for attending this event. We hope you found it informative and valuable. A special thanks goes to our speakers and panelists for today. I hope everyone has a great day, and goodbye.