Vexed Cisco CEO John Chambers vows to outsell tiny Arista Networks

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Vexed Cisco CEO John Chambers vows to outsell tiny Arista Networks

"At the end of the day, Cisco can be as aggressive as they want to be. They could even give away the product for free, but people are still going to buy Arista because it offers things Cisco doesn't offer."

Hummelstown, PA: Sat, 4/19/14 - 7:33am View comments

Sales revenue of the tiny but highly innovative cloud networking solutions vendor, Arista Networks, have been soaring according to its most recent Form S-1 filing with the U.S. Securities and Exchange Commission.

Also, tiny Arista appears to have Cisco CEO John Chambers totally vexed, at least according to Barron's:

"Chambers promises to outsell Arista. 'I give us very good odds we'll blow right pass Arista in the next four quarters,' he says.

"Arista's Ullal declined to comment, citing a quiet period in advance of the company's initial public offering."

John Chambers: The Once and Future King of Tech

Perhaps most ominous for Chambers and Cisco's shareholders was the Barron's quote from Brian Marshall, a senior managing director of the institutional investor research firm, International Strategy & Investment:

So what exactly is it about tiny Arista that has John Chambers so vexed and Brian Marshall so enthusiastic?

Well, Arista's Form S-1 filing (page 57) offers perhaps the best clue, at least in my opinion:

"According to Crehan Research, we have achieved the second largest market share in data center 10/40/100 Gigabit Ethernet switch ports, excluding blade switching, sold in 2013.

"As of December 31, 2013, we have shipped more than one million switch ports. As we have grown our portfolio of products, our business has also grown from over 100 employees as of December 31, 2010 to more than 750 employees as of December 31, 2013.

"We have experienced rapid revenue growth over the last several years, increasing our revenue at a compound annual growth rate of 71% from 2010 to 2013. Our 2013 revenue grew 87% when compared to 2012. We have been profitable and cash flow positive for each year since 2010.

"We believe that our cloud networking platform addresses the large and growing cloud networking segment of data center switching, which remains in the early stage of adoption. We expect to continue rapidly growing our organization to meet the needs of new and existing customers as they increasingly realize the performance and cost benefits of our cloud networking solutions and as they expand their cloud networks. We believe one of our greatest strengths lies in our rapid development of new features and applications.

"For 2011, 2012 and 2013, our revenue was $139.8 million, $193.4 million and $361.2 million, respectively, and our net income was $34.0 million, $21.3 million and $42.5 million, respectively.

"As illustrated below, the programmability of EOS has allowed us to create a set of software applications and application programming interfaces, or APIs, that address the requirements of cloud networking, including workflow automation, network visibility and analytics, and has further allowed us to integrate rapidly with a wide range of third-party applications for virtualization, management, automation, orchestration and network services.

"We deliver switches with industry-leading capacity, low latency, port density, power efficiency. We have also innovated in areas such as deep packet buffers, embedded optics and reversible cooling. An overview of our switching portfolio is shown in the figure below."