Networking is a term that is thrown around the tech industry just as much as it is at career counseling events. No matter how different the terms’ denotations may be, they are exactly the same at the core. Networking, in both settings, is about connectivity. As new jobs are born in innovative industries, and as IT environments continue to become more complex, networking is now more important than it has ever been.
Last Thursday, a few of us at AMI-Partners were able to sit in on a briefing from Cisco about fourth quarter 2012 results. The networking bellwether reported a 4% increase in their 4Q year over year (YoY) sales, with a 7% YoY growth for FY12. The primary regional growth driver was APJC (Asia-Pacific), which saw a 12% increase in product orders. Europe, Middle East, and Africa (EMEA)—in line with lingering economic uncertainty in Europe–saw a decrease in product orders, as Cisco acknowledges that the region will continue to be “very challenging” for future sales. In their customer segment, Cisco witnessed the highest growth within in the enterprise and commercial (which includes SMBs and consumers) groups, a sign that businesses are continuing to build out essential networking deployments
Cisco’s Data Center revenue, primary driven by the cloud-oriented Unified Computing & Servers group, nearly doubled from the last year, underlining a trend of businesses upgrading from individual components to integrated data centers.
Wireless products served as the second fastest growing product segment during FY12. As workers become more mobile and internet infrastructure continues to be adopted, AMI predicts that worldwide SMB wireless broadband spend will experience a compounded annual growth rate (CAGR) of 26% through 2016.
The third highest growth was seen in security, at 12% YoY. Security is becoming increasingly important for SMBs, both in emerging and mature markets; and security spending will continue to accelerate as companies transition into the cloud. AMI predicts that worldwide, SMB spending on security hardware will grow at an 11% CAGR through 2016.
AMI’s research shows that the worldwide SMB networking spend grew 4% from 2011 to 2012, indicating that Cisco’s 7% FY12 YoY growth beat the industry benchmark, at least for SMBs. AMI predicts a 10% SMB networking CAGR for the next 4 years through 2016, and it will be interesting to see if Cisco can continue to ”network” its way to the top.
-Kimberly Chau, Marketing Associate, Clayton Miller, Associate, Monik Sheth, Research Analyst