Cisco
Networking infrastructure company transforming from hardware sales to 54% recurring software revenue by late 2025.
Cisco closed fiscal 2025 with $56.7 billion in revenue and a remarkable milestone: over 54% now comes from software and recurring subscriptions, up from a business historically dominated by hardware sales. This is metamorphosis—not just adding software, but fundamentally restructuring how the organism generates energy.
The transformation wasn't smooth. Networking revenue fell 23% year-over-year in Q1 FY2025 as enterprise customers reallocated budgets toward AI and cybersecurity. By Q4 FY2025, networking rebounded with 12% growth, driven by webscale infrastructure buildouts. Four of the top six webscale clients showed triple-digit order growth. What changed wasn't customer demand for networks—it was the economics of network provisioning.
Cisco pivoted from selling routers and switches to selling network infrastructure as a recurring service. Annual recurring revenue (ARR) hit $30.1 billion in Q2 FY2025, up 22% year-over-year. The company's AI infrastructure orders exceeded $2 billion for the full fiscal year, more than double the original $1 billion target. Webscale customers ordered over $800 million in AI infrastructure in Q4 alone—not as one-time purchases, but as ongoing platform relationships.
The biological model is platform architecture with ecosystem orchestration. Cisco positions itself as the web builder (spider analogy), constructing network infrastructure that other organisms traverse. The Splunk acquisition (contributing ~$960 million in Q4 2024) added observability and security layers, expanding from network plumbing into monitoring and defense. At Cisco Live 2025, CEO Chuck Robbins declared "Cisco is an AI company with networking at its core"—framing the network as substrate for AI workloads, not an end in itself.
What makes this strategically sound is lock-in through integration. Once enterprises deploy Cisco infrastructure with embedded security, observability, and AI optimization, switching costs compound. The network becomes ecosystem, and Cisco becomes keystone species. Service provider and cloud customer orders jumped 49% year-over-year in Q4 FY2025, validating the shift from transactional hardware sales to recurring platform relationships.