Cisco's chief executive Chuck Robbins has said customers are more concerned about opex than capex for the first time ever, signalling a huge shift in the industry.
Speaking at the Cisco Global Editors' Conference last night, Robbins (pictured) told attendees that the upfront cost of products is now a secondary concern – something that has never happened before.
"For the first time, I believe customers are fundamentally more concerned about the operational costs of their IT infrastructure than the capex," he said. "I can tell you, in our history, that has not been the case.
"Historically, all the negotiations with customers have been around the cost of the product upfront, and it will continue to be a point that we will work with our customers on, but they spend more time now thinking about the ongoing operational costs because that is where 70 per cent of the total cost is."
He said the industry shift marks an unrecognisable change from the early stages of the internet.
"In the 90s, when we were going through the first phase of the internet, we had to be evangelists," he said. "We had to convince people 'no, trust me, this is going to be big!'. It was and it is. The good news is now every customer knows technology enables their strategy – there is no debate."
But other changes have occurred in the past few decades which place significant strains on the business landscape, he admitted.
"There are so many more dynamics today that I have to consider than what we ever thought about 25 to 30 years ago," he said. "There have always been regulatory issues that impact how an industry thinks about its business; there have always been tax issues that affect how you think about your business. But now, the geopolitical dynamics we face change almost daily.
"I joke with our team that when I wake up every day, the first thing I do is scan the news to see what crisis we have today that is going to fundamentally impact how we think about our business and how we think about what's going on with our customers.
"The geopolitical issues affect us in ways we never thought possible. It's going from being [about] compliance, tax freedom [and] data privacy to data sovereignty and security concerns.
"Those issues are real for every customer. The economic shifts we see are happening at a pace which is unbelievable. Sometimes we don't understand what is going on at any given time. Currency over the last couple of years [too] – all these dynamics continue to create challenges and opportunities."
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