April 15, 2024

Cisco CEO talks about AI and why the Internet “needs” the company

The conversation about AI continues and the World Economic Forum in Davos, Switzerland was no exception. Cisco (CSCO) CEO Chuck Robbins joins Yahoo Finance Live to discuss the trajectory of AI and how it will impact the company.

Speaking of great language-based models in generative AI, Robbins believes the companies that will stand out are those that are creating “value-based capabilities that help end users leverage the data they have.”

Robbins sees a wide range of possibilities for incorporating AI into network equipment, β€œit’s still early, but I think there will be a lot of opportunities.”

Robbins, known for being an acquisition company, notes that some company valuations are “crazy,” but says the company has “acquired incredible AI talent” through recent acquisitions.

Looking ahead, Robbins says that while the company has been developing its software business, its hardware business also remains important, saying, “The Internet needs us to be a really good hardware company.”

The world of AI is constantly evolving, and Robbins says the company is ready to meet the demands: “We’re now putting together a plan for how we can [Cisco] educate different aspects of the company on how they should think about it.”

This interview is part of Yahoo Finance’s exclusive coverage from the World Economic Forum in Davos, Switzerland, where our team will speak with top decision-makers, as well as preeminent leaders in business, finance and politics, about the most pressing issues and priorities. pressing issues in the world for next year.

Watch this full episode of Yahoo Finance Live here.

Editor’s Note: This article was written by Eyek Ntekim

Video transcript

[AUDIO LOGO]

BRIAN SOZZI: There’s a lot of attention on all things AI here at this year’s World Economic Forum in Davos, Switzerland. Let’s have that conversation about AI with Cisco CEO Chuck Robbins. Chuck, it’s always a pleasure spending time with you. What are we missing in AI? Tell us.

CHUCK ROBBINS: Nothing.

[LAUGHS]

BRIAN SOZZI: Nothing is right.

CHUCK ROBBINS: You have to know everything about it at this point with all the discussions this week. I think… look, I think it’s incredibly early, I mean, with AI right now. And everyone is trying to speculate. But I think if you go back, think about when the iPhone was released. And we had no idea what apps would eventually appear on that iPhone, or the things we could do with it, or the use cases that emerged.

And I think we’re in that same phase right now, particularly with enterprise use cases. I think our customers are really trying to… I think we know some that make a lot of sense, like customer service and contact center, and creating new interfaces for technology that are more language-based rather than typing on a command line.

Assistance that helps you with different technologies that help you understand what to be: how to think about possible outcomes or possible causes of things that are happening. All of those things, I think, we expect and are working on right now. But I think the most important business applications are yet to be determined.

BRIAN SOZZI: This morning I was walking along the boardwalk. And everyone has a window and everyone has these big TVs showing demos of something. And I’m sure it’s backed by great language models that support something. All these companies can’t win, right, Chuck? There’s going to be a shakeup, right?

CHUCK ROBBINS: Of course.

BRIAN SOZZI: What does that look like?

CHUCK ROBBINS: Well, I think if you look at the bottom line… and I’m not an expert on these things. So the guys you’re talking to are probably more knowledgeable about the details. But what I believe is that large language models that are being built largely from the information available, absorbing information from the Internet, over time, the information will load and they will be effective. And generally they’re going to be… I think even Sam Altman even said it’s going to go to zero and become commoditized.

I think the winners will be those who figure out how to create value-based capabilities that help end users leverage the data they have. And how do I help them turn that into something more valuable than it is today?

And I’ve met with a couple of companies that are doing really interesting things right now and I think they’re thinking that way. And we will partner with many of them because of our business presence. So I think that’s how it will play out.

JULIE HYMAN: And you said that the way AI could inform your business is that there will be more demand for networking equipment, because there will be more demand for computing because of AI, right? So–

CHUCK ROBBINS: That’s one way.

JULIE HYMAN: So talk to me specifically that way first. And then we can address other paths. Where are we in that adoption cycle?

CHUCK ROBBINS: So how technical do you want to get? So–

JULIE HYMAN: Not too much. Not too much.

CHUCK ROBBINS: So let’s take NVIDIA as an example. Today, NVIDIA sells its GPUs and has networking technology that it sells with them. It’s called InfiniBand. And most of the web-scale players and others who are building these big language models want to use Ethernet instead of InfiniBand. They want to use standard technology.

There are some special features we need in Ethernet to make this viable. But we are now running Ethernet under the GPUs in pilot phase in many of the current web-scale players. And that’s a huge opportunity for us, because as they build it out and we have this technology underneath, whenever the GPUs come in, you’ll see our technology underneath.

So the company is really trying to figure out that they’re going to have to create a technology stack that allows customers to take small amounts of their data and put it at the edge of their enterprise. , closer to where the client is. And they will want to run inference models. And so we’ll be… we’re working on designing what that would look like. In many cases, partnering with GPU players with our technology.

It’s still early, but I think there will be a lot of opportunities there. And then there are all the security issues that need to be addressed.

BRIAN SOZZI: Other than… I know about the deal with Splunk, you’re still working on it. But Cisco, for decades, has been a major acquirer of very large companies. I mean, that’s how the company got to the point it is at today. I mean, if you look at some of these businesses on the boardwalk and think, wow, this could be a frenzy over the next decade.

CHUCK ROBBINS: I just can’t afford any of them.

[LAUGHS]

BRIAN SOZZI: Well, the ratings are too high.

CHUCK ROBBINS: Some of the valuations, I think, are crazy. But I mean, that’s what markets do: the market is the market, right? So it is, and part of the reason, that I made a comment earlier this week about valuations relative to their earnings, but the reality is that getting started in these businesses requires so much capital, that valuations are naturally rising. due to the amount of capital being injected to build the underlying technological infrastructure. So I understand how it happened. I just don’t know how it ends.

But no, I think you’re right. We’ve made… we’ve made several acquisitions in our security portfolio and in our collaboration portfolio and we just gained some incredible talent in AI. So we’re very excited about that. So I think you’ll see us continue to do that.

JULIE HYMAN: One of the other things we’ve been talking about is that companies that have been around for a while are going through some changes. The Splunk acquisition… and when it closes, it will be a game changer for you. You’re trying to diversify a little more into services, as I understand it.

CHUCK ROBBINS: Software, yes.

JULIE HYMAN: Software. Far from the traditional business for you. So what will Cisco be like in five years?

CHUCK ROBBINS: Well, we’ve been working on this transition, and when we close Splunk, I think our software business will be around $22 billion. And so we have made a lot of progress. And I don’t know if that makes us number five or six or something like that in the world.

But at the same time, we still have a pretty significant hardware business. And the Internet needs us to be a really good hardware company, because all the technology we need continues to support all the traffic growth that we see around the world. So I think both sides will continue to rise.

I think as this AI thing explodes, my expectation is that our infrastructure team that goes along with it will also increase. And we will continue to invest in our software assets and add more software assets where we can.

BRIAN SOZZI: We’ve talked to many leaders here so far at the conference. And I think they know a little bit about AI. But for many of them this is new. And more new things may arrive tomorrow. As a leader, how can you stay informed about a technology that didn’t exist 20 years ago and things could be different a week from now?

CHUCK ROBBINS: We have… about three of my direct reports are pretty deep into this. And that’s why they give us basic information almost every week about what’s happening, what’s changing, how things are evolving. And then we just… we spent a lot of time with them educating the rest of the team.

And we’re building… we’re now building a plan for how we educate different aspects of the company about how they should think about it. I asked every function within the company to give me their plan for how generative AI will fundamentally change productivity or whatever they do. And then everyone is working on that too. So it’s all educational as we go.

BRIAN SOZZI: Fascinating things. Chuck Robbins, CEO of Cisco, thank you for giving us time in Davos. As always, we appreciate it.

CHUCK ROBBINS: It’s great to see you guys.

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