Cisco may soon sell its operating system software for networking devices without requiring the purchase of its hardware, according to The Information, citing people familiar with the company's plans.
If the plan comes to fruition, Cisco customers could for the first time use Cisco operating system software in networking devices made by other companies.
Companies such as Arista Networks and Juniper Networks already offer software that can run on hardware that does not have a well-known brand name, according to the report.
Cisco has been working to transition away from its reliance on hardware and this potential move is another step in that direction. Networking hardware has become commoditized over the years, and new competitors are offering cheaper products to undercut the networking giant.
The move is a bit risky, because Cisco’s switching business is among the company’s largest areas by revenue. Cisco's switching segment pulled in $14.7 billion in revenue in the fiscal year ended July 30, 2016, which is nearly 40% of the company's total revenues.
Overall, though, revenue for Cisco’s switching and routing systems has steadily weakened in recent years. Under CEO Chuck Robbins, Cisco has become increasingly interested in subscription-based services, where it can maintain steady income because of the shifting trend away from hardware.
But the move is also indicative of where the industry is going overall, and that's all about software, not hardware. Companies across sectors are implementing solutions that take a software-based approach to what used to be a hardware solution.