Opinion: By buying Splunk, Cisco is closer to becoming a software company – Stocks24>
– Lebohang Tshigeng
When Cisco Systems (CSCO) announced that it would acquire data analytics software provider Splunk Inc. (NASDAQ:SPLK) earlier this month, investors were quick to recognize the implications.
Chief Executive Officer Chuck Robbins was signalling, louder than ever, that Cisco is marching towards becoming a software company rather than a hardware one.
The company’s Silver Lake investment has been the clearest indicator of this ambition.
By leveraging the $2 billion it received a few months ago from the technology-focused investment firm, Cisco has bet big on software services.
It recently sold off its hardware division, transitioning from a device-oriented to a data-oriented model.
Splunk’s software also offered Cisco a quick, one-time entry into the market.
By purchasing Splunk, Cisco acquired hundreds of customers, attorneys, and data experts.
It now has the technology needed to deliver big data analytics services, a capability that it could not achieve overnight with internal innovation.
Another important fact to consider is that Splunk was reporting high growth and healthy returns, so it was an attractive prospect to a company looking to strengthen its software division.
Cisco now owns the popular Splunk Enterprise suite and its cloud-based products like Splunk Cloud and Splunk Business Flow, two essential tools for enterprise data analytics.
This means that the tech giant can now build analytics solutions tailored to each customer’s individual needs.
It can also offer personalized support and solutions tailored to adversaries when needed.
Cisco’s acquisition of Splunk has given it the necessary technology needed to join the likes of SAP or IBM as a software company.
While it may take some time for it to completely shift its business model, Robbins’ vision of a more service-oriented Cisco is becoming a reality.
Link: https://stocks24.co.za/2023/09/22/opinion-by-buying-splunk-cisco-is-closer-to-becoming-a-software-company/