Cisco Going 'Even Bigger, Even Faster' in AI-Related Acquisitions, Investments

CISCO LIVE — Cisco Systems is turning to organic and inorganic methods of bolstering its artificial intelligence (AI) portfolio and pouring no small amount of money into each.

Cisco on Tuesday announced a $1 billion investment fund dedicated to AI-focused startups. The fund, led by the Cisco Investments venture investment arm, has already committed almost nearly $200 million.

Cisco highlighted Cohere, Mistral AI and Scale AI as key beneficiaries of strategic investments. But those startups are just three of more than 20 acquisitions and investments Cisco has made in AI in the last few years, executives said. And $1 billion Global AI Investment Fund will help ramp up those logos.

"We are very excited about this. This is a bit of what we've been doing for a long time, but to me this is about going even bigger and even faster," said Derek Idemoto, senior vice president of corporate development and Cisco Investments.

Cisco's Derek Idemoto

CEO and chairman Chuck Robbins pointed to how vendors and customers are alike have sped up their pace of innovation in the age of AI. For example, Nvidia is accelerating from introducing a new chip every 24 to 36 months, to every 12 months.

Cisco's Chuck Robbins

"I think the pace AI is moving is going to force us to make every business decision faster. We're going to make people decisions faster. We're going to have to just move faster to keep up, and we're gonna have to innovate faster," Robbins told the Cisco Live audience Tuesday morning.

Related:Cisco Unleashes Deluge of AI, Networking, Security Advancements

Organic and Inorganic

And Cisco's larger innovation strategy around AI encompasses four pillars: build, partner, buy, invest.

On the "buy" side, the Splunk and MindMeld join a group of seven AI-related companies Cisco has acquired or is acquiring.

On the "partner" side, Cisco on Tuesday launched a data center infrastructure solution integrated with Nvidia's accelerated computing and AI software. The HyperFabric AI cluster solution is an on-premises solution based on cisco's Nexus 6000 switch series and its QSFP-DD Optics family.

Cisco delineates its AI portfolio into six categories: AI assistants and agents, applications, toolchains, models, data and infrastructure. Some of those categories, such as models and compute, will rely more heavily on partnerships than other categories.

It comes down to a balance, recently appointed chief strategy officer Mark Patterson said.

"You've got to have investments that you're making, partnerships you're driving, companies you're looking to acquire as well as some incubation that's going on within the company," Patterson told analyst and press on Monday.

Related:Cisco, Partners See Wins from Ecosystem Co-Selling

Cisco cited an IDC forecast that the global AI market will double in size to more than $500 billion by the end of the next three years. And while Nvidia appears to be the big winner in terms of publicly traded companies that are cashing in on the current generative AI trend, Cisco predict that "AI will melt into the network," just as they expect it to melt into security. And they believe Cisco stands poised to deliver on that demand.

For example, last month Cisco announced its Hypershield security architecture that targets the "AI-scale data center."

"There's going to be a lot of net-new that is created. Right now you're seeing all the headlines being grabbed by Nvidia in the GPU side. But a lot is going to catch up there," Idemoto said.

Cisco Incubation

Cisco also touted its Outshift by Cisco incubation engine, which formerly known as Cisco Emerging Technologies & Incubation. Outshift possesses an internal team of technical and go-to-market professionals, which have launched projects like cloud security platform Panoptica.

The idea is to move fast on emerging technologies that are hitting the market at a breakneck pace, while designing it in a way that fits with Cisco's processes.

"What you get is something that is completely integrated with the processes that exist within the organization. When you acquire, it takes a long time to actually integrate within the organization," said Vijoy Pandey, who leads Outshift by Cisco. "But with Panoptica, it's already in your Salesforce instance and your development practices. When you graduate, and when you scale, it's actually much easier to scale up."

Outshift recently unveiled Motific, software designed to help businesses track the LLM deployments and usage in their organization.

Cisco executives in a Q&A with press and analysts on Monday acknowledged the culture shift they are undertaking to be more collaborative within the industry.

"There's still antibodies within Cisco that say, 'Wait a minute- that's part of our business. We should be developing that.' There's a culture within Outshift that Vijoy is trying to build and protect," Patterson said.

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