Cisco’s supply chain shortages are history, AI networking gains momentum

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While the supply chain issues that dogged most of the networking vendors over the past couple of years have dwindled, Cisco says the current challenge is a backlog of purchased gear waiting to be installed by large enterprise and service providers.

“After three quarters of exceptionally strong product delivery, our customers are now focused on installing and implementing these unprecedented levels of products. The bottleneck that we previously saw in the supply chain has now shifted downstream to implementation by our customers and partners,” Cisco CEO Chuck Robbins told analysts on its first-quarter financial call this week.

Robbins cited, as an example, a large enterprise that may be doing an infrastructure refresh or doing a branch rollout and has ordered and received 400-500 switches. That gear may be sitting with the enterprise, waiting to be installed. Or the enterprise could have a partner that’s doing the staging, and that partner may be backed up. “So it varies, but it could be either one of those or a combination of both,” he said.

“Simply put, customers are now taking time to onboard and deploy these heightened product deliveries,” Robbins said. Cisco estimates “there is an additional one quarter to two quarters worth of shipped orders in customers’ hands, still waiting to be deployed,” he added.

The result is less orders, until this backlog is installed, and an impact on company revenues, Robbins said.  “We believe this implementation phase is the primary reason for the slowdown in new orders.”