What’s good for cloud vendors could be bad for traditional on-premise technology providers such as Cisco, according to Rod Hall of J.P. Morgan, Barron’s reports.
Hall issued a note to clients on Wednesday cautioning that traditional network and data center technology makers could take a dive next year as cloud continues to snowball. "While we are currently predicting a very small 2% decline we would expect the deterioration to accelerate and begin to materially affect Cisco and other legacy vendors by 2018," Hall wrote.
"We would expect switching vendors like Cisco to be the hardest hit with storage vendors not too far behind," Hall wrote.
Cloud revenue is already up 60% so far in 2016, according to Hall. He predicts businesses will continue to move to the cloud rapidly, causing an accelerating decline among network and datacenter technology makers like Cisco.
But don’t count Cisco out yet. The company has seen this shift coming for a while, and has been working through a number of restructuring efforts and layoffs as part of its strategy to transition away from its traditional offerings to emerging areas like security, IoT, collaboration, next generation data center and cloud.
Other companies that are sure to be negatively impacted by the market shift will likely have to make changes and restructuring efforts not unlike what Cisco has done.