#Cisco Reports Second Quarter Earnings #CSCOQ2FY16 $CSCO

SAN JOSE, CA– Feb 10, 2016 – Cisco (NASDAQ: CSCO)

Q2 Revenue (excluding SP Video CPE Business): $11.8 billion Increase of 2% year over year — (Q2 guidance was 0% – 2% growth year over year)Q2 Earnings per Share: $0.62 GAAP; $0.57 non-GAAPQ3 Guidance: Revenue: 1% – 4% growth year over year (normalized to exclude SP Video CPE Business for Q3 2015)Non-GAAP Earnings per Share: $0.54 – $0.56

Cisco, the worldwide leader in networking that transforms how people connect, communicate and collaborate, today reported second quarter results for the period ended January 23, 2016. Cisco reported second quarter revenue of $11.9 billion, net income on a generally accepted accounting principles (GAAP) basis of $3.1 billion or $0.62 per share, and non-GAAP net income of $2.9 billion or $0.57 per share. Second quarter revenue was $11.8 billion excluding $93 million of revenue from the Customer Premises Equipment portion of the Service Provider Video Connected Devices business (SP Video CPE Business) that was divested during the second quarter on November 20, 2015.

“We delivered a strong Q2, and are managing the business extremely well in a challenging macro environment,” said Chuck Robbins, Cisco chief executive officer. “We’re managing the company on two fronts. We’re focused on continued strong execution in the near term while investing in the innovation to lead our customers into the future.”

A reconciliation between net income and EPS on a GAAP and non-GAAP basis is provided in the table following the Consolidated Statements of Operations. Supplementary information related to other GAAP and non-GAAP measures is also provided in the tables below.

Cisco Increases Quarterly Cash Dividend; Stock Repurchase Program Authorization Increased

Cisco has also declared a quarterly dividend of $0.26 per common share, a 24% or five-cent increase over the previous quarter’s dividend, to be paid on April 27, 2016 to all shareholders of record as of the close of business on April 6, 2016. Future dividends will be subject to Board approval.

Cisco’s board of directors has also approved a $15 billion increase to the authorization of the stock repurchase program. Cisco’s board had previously authorized up to $97 billion in stock repurchases. There is no fixed termination date for the repurchase program. The remaining authorized amount for stock repurchases under this program, including the additional authorization, is approximately $16.9 billion.

“We had another strong quarter, delivering both the top line and bottom line growth,” said Kelly Kramer, Cisco executive vice president and chief financial officer. “I’m happy with the progress we are making as we continue to shift our business model to more software, and recurring revenue. We are very confident in the strength of our business and future cash flows allowing the substantial increase of our dividend this quarter to $0.26. We remain committed to our shareholders in delivering profitable growth and returning a minimum of 50 percent of our free cash flow back annually.”

Financial Highlights for Q2 FY16
(All comparative percentages are on a year-over-year basis unless otherwise noted)

All revenue, non-GAAP, and geographic financial information in this “Financial Highlights for Q2 FY16” section are presented excluding the SP Video CPE Business for all periods as it was divested during the second quarter on November 20, 2015.

Revenue — Revenue was $11.8 billion, up 2% with product revenue up 2%. Service revenue growth was 3%. Revenue by geographic segment was: Americas and EMEA each up 1%, and APJC up 11%. Product revenue growth was led by Security which increased 11%, and NGN Routing and Collaboration which increased 5% and 3%, respectively. Wireless was flat while Switching and Data Center declined 4% and 3%, respectively.

Gross Margin — On a GAAP basis, total gross margin and product gross margin were at 62.3% and 61.3%, respectively. Non-GAAP total gross margin and product gross margin were 64.2% and 63.3%, respectively. This increase in the non-GAAP product gross margin as compared with 62.5% in the second quarter of fiscal 2015 was driven by continued productivity improvements, partially offset by pricing and to a lesser extent product mix. GAAP service margin was 65.5% and non-GAAP service gross margin was 66.7%. Total gross margins by geographic segment were: 64.3% for the Americas, 65.4% for EMEA, and 61.8% for APJC.

Operating Expenses — On a GAAP basis, operating expenses were $4.1 billion, down 7%. Non-GAAP operating expenses were $3.9 billion, down 1%, and at 33.0% of revenue. Headcount compared with the end of the first quarter of fiscal 2016 decreased by 406 to 71,657, which included the impact from the divestiture of the SP Video CPE Business and our workforce realignment, partially offset by additional headcount from acquisitions and investments in key growth areas such as security, cloud and software. 

Operating Income — GAAP operating income was $3.3 billion, up 26%, with GAAP operating margin of 27.6%. Non-GAAP operating income was $3.7 billion, up 10%, with non-GAAP operating margin at 31.2%.

Provision for Income Taxes — The GAAP tax provision rate was 4.8%. Tax benefits of $519 million related to prior-year periods were included in the GAAP tax provision rate but were excluded in the non-GAAP tax provision rate. The non-GAAP tax provision rate was 20.9%, reflecting the reinstatement of the U.S. federal R&D tax credit.

Net Income and EPS — On a GAAP basis, net income was $3.1 billion and EPS was $0.62. On a non-GAAP basis, net income was $2.9 billion, an increase of 8%, and EPS was $0.57, an increase of 8%.

Cash Flow from Operating Activities — was $3.9 billion an increase of 36% compared with $2.9 billion for the second quarter of fiscal 2015.

Cash and Cash Equivalents and Investments — were $60.4 billion at the end of the second quarter of fiscal 2016, compared with $59.1 billion at the end of the first quarter of fiscal 2016, and compared with $60.4 billion at the end of fiscal 2015. The total cash and cash equivalents and investments available in the United States at the end of the second quarter of fiscal 2016 were $3.9 billion.

Deferred Revenue — was $15.2 billion, up 8% in total, with deferred product revenue up 11%, driven largely by subscription based and software offerings, and deferred service revenue up 7%. Cisco continued to build a greater mix of recurring revenue as reflected in deferred revenue.

Days Sales Outstanding in Accounts Receivable (DSO) — was 33 days at the end of the second quarter of fiscal 2016, compared with 34 days at the end of the first quarter of fiscal 2016.

Other Financial Highlights

In the second quarter of fiscal 2016, Cisco declared and paid a cash dividend of $0.21 per common share, or $1.1 billion. For the second quarter of fiscal 2016, Cisco repurchased approximately 48 million shares of common stock under its stock repurchase program at an average price of $26.12 per share for an aggregate purchase price of $1.3 billion.

As of January 23, 2016, Cisco had repurchased and retired 4.5 billion shares of Cisco common stock at an average price of $20.97 per share for an aggregate purchase price of approximately $95.1 billion since the inception of the stock repurchase program.

Acquisitions

During the second quarter of fiscal 2016, Cisco completed the acquisitions of Portcullis, ParStream, Lancope and 1 Mainstream in the security, data analytics and video markets. These moves are consistent with Cisco’s strategy to increase innovation and R&D investment in growth areas. Cisco recently completed the acquisition of Acano to help accelerate Cisco’s collaboration strategy to deliver video more broadly. In addition, on February 3, 2016, Cisco announced its intent to acquire Jasper Technologies, a company that provides a cloud-based Internet of Things (IoT) software-as-a-service platform, which is expected to close in the third quarter of fiscal year 2016.

Business Outlook for the Third Quarter of Fiscal Year 2016

On November 20, 2015, during the second quarter of fiscal 2016, Cisco completed its divestiture of the SP Video CPE Business. In order to provide a clear view of Cisco’s continuing expected financial performance, the revenue guidance for the third quarter of fiscal 2016 is normalized to exclude the SP Video CPE Business for the third quarter of fiscal 2015. The corresponding revenue in the third quarter of fiscal 2015 for the SP Video CPE Business was $519 million.

Cisco expects to achieve the following results for the third quarter of fiscal year 2016:

Cisco’s third quarter of fiscal 2016 will have 14 weeks compared to 13 weeks for the third quarter of fiscal 2015 which is reflected in the guidance.

Cisco estimates that GAAP EPS will be lower than non-GAAP EPS by $0.08 to $0.12 per share in the third quarter of fiscal 2016 as follows:

Share-based compensation expense is expected to impact Cisco’s results of operations in similar proportions as the second quarter of fiscal 2016. Amortization of purchased intangible assets and other acquisition-related/divestiture costs will be reported as GAAP operating expenses, cost of sales, or other income/(loss) as applicable.

Except as noted above, this guidance does not include the effects of any future acquisitions/divestitures, asset impairments, restructurings and tax or other events, which may or may not be significant unless specifically stated.

Editor’s Notes:

Q2 fiscal year 2016 conference call to discuss Cisco’s results along with its business outlook will be held on Wednesday, February 10, 2016 at 1:30 p.m. Pacific Time. Conference call number is 1-888-848-6507 (United States) or 1-212-519-0847 (international).Conference call replay will be available from 4:00 p.m. Pacific Time, February 10, 2016 to 4:00 p.m. Pacific Time, February 19, 2016 at 1-888-562-6191 (United States) or 1-402-280-9986 (international). The replay will also be available via webcast from February 10, 2016 through April 22, 2016 on the Cisco Investor Relations website at http://investor.cisco.com.Additional information regarding Cisco’s financials, as well as a webcast of the conference call with visuals designed to guide participants through the call, will be available at 1:30 p.m. Pacific Time, February 10, 2016. Text of the conference call’s prepared remarks will be available within 24 hours of completion of the call. The webcast will include both the prepared remarks and the question-and-answer session. This information, along with the GAAP to non-GAAP reconciliation information, will be available on the Cisco Investor Relations website at http://investor.cisco.com.

The Consolidated Statements of Operations include the results of the SP Video CPE Business prior to its divestiture on November 20, 2015. Accordingly, the three months ended January 23, 2016 includes only one month of financial results for this business.

(1) The sale of the SP Video CPE Business resulted in a pre-tax gain of $286 million, net of certain transaction costs incurred in prior periods. The gain on this transaction was excluded from non-GAAP net income for the second quarter and first six months of fiscal 2016.

(2) During the second quarter of fiscal 2016, Cisco recorded certain net tax benefits totaling $519 million related to prior-year periods that were excluded from non-GAAP net income for the second quarter and first six months of fiscal 2016. These net tax benefits are primarily comprised of settlement of all outstanding items related to Cisco’s U.S. federal income tax returns for the fiscal years ended July 26, 2008 through July 31, 2010 of $367 million, the retroactive reinstatement of the U.S. federal R&D tax credit of $84 million related to fiscal 2015, and a net tax benefit of $68 million related to other significant tax matters.

(1) For the three months ended January 23, 2016 the calculation of gross margin percentages excludes gross profit for the SP Video CPE Business of $13 million for the Americas. For the six months ended January 23, 2016, the calculation of gross margin percentages excludes gross profit for the SP Video CPE Business of $41 million and $15 million for the Americas and EMEA, respectively.

* Excludes SP Video CPE Business revenue for all periods presented.
(1) The three months ended January 23, 2016 included one month of revenue for the SP Video CPE Business, which was divested during the second quarter on November 20, 2015.

Certain reclassifications have been made to prior year amounts to conform to the current year’s presentation.

*Reflects one month of operations for the SP Video CPE Business, which was divested during the second quarter on November 20, 2015.

*Reflects three months of operations for the SP Video CPE Business.

Forward Looking Statements, Non-GAAP Information and Additional Information

This release may be deemed to contain forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, statements regarding future events (such as the impact of the macro environment, our innovation strategy and execution, our ability to shift our business model to more software and recurring revenue, our ability to deliver profitable growth and strong cash generation, our business strength, financial guidance, and our capital allocation strategy) and the future financial performance of Cisco that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including: business and economic conditions and growth trends in the networking industry, our customer markets and various geographic regions; global economic conditions and uncertainties in the geopolitical environment; overall information technology spending; the growth and evolution of the Internet and levels of capital spending on Internet-based systems; variations in customer demand for products and services, including sales to the service provider market and other customer markets; the return on our investments in certain priorities, including our foundational priorities, and in certain geographical locations; the timing of orders and manufacturing and customer lead times; changes in customer order patterns or customer mix; insufficient, excess or obsolete inventory; variability of component costs; variations in sales channels, product costs or mix of products sold; our ability to successfully acquire businesses and technologies and to successfully integrate and operate these acquired businesses and technologies; our ability to achieve expected benefits of our partnerships; increased competition in our product and service markets, including the data center market; dependence on the introduction and market acceptance of new product offerings and standards; rapid technological and market change; manufacturing and sourcing risks; product defects and returns; litigation involving patents, intellectual property, antitrust, shareholder and other matters, and governmental investigations; natural catastrophic events; a pandemic or epidemic; our ability to achieve the benefits anticipated from our investments in sales, engineering, service, marketing and manufacturing activities; our ability to recruit and retain key personnel; our ability to manage financial risk, and to manage expenses during economic downturns; risks related to the global nature of our operations, including our operations in emerging markets; currency fluctuations and other international factors; changes in provision for income taxes, including changes in tax laws and regulations or adverse outcomes resulting from examinations of our income tax returns; potential volatility in operating results; and other factors listed in Cisco’s most recent report on Forms 10-Q and 10-K filed on November 19, 2015 and September 8, 2015, respectively. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes thereto included in Cisco’s most recent report on Form 10-K as it may be amended from time to time. Cisco’s results of operations for the three and six months ended January 23, 2016 are not necessarily indicative of Cisco’s operating results for any future periods. Any projections in this release are based on limited information currently available to Cisco, which is subject to change. Although any such projections and the factors influencing them will likely change, Cisco will not necessarily update the information, since Cisco will only provide guidance at certain points during the year. Such information speaks only as of the date of this release.

This release includes non-GAAP net income, non-GAAP gross margins, non-GAAP operating expenses, non-GAAP operating income and margin, non-GAAP effective tax rates, non-GAAP net income per share data, non-GAAP inventory turns and free cash flow for the periods presented. It also includes future estimated ranges for gross margin, operating margin, tax provision rate and EPS on a non-GAAP basis.

These non-GAAP measures are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Cisco believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Cisco’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Cisco’s results of operations in conjunction with the corresponding GAAP measures.

Cisco believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and its historical and projected results of operations. In addition, Cisco believes that the presentation of non-GAAP inventory turns provides useful information to investors and management regarding financial and business trends relating to inventory management based on the operating activities of the periods presented. Cisco believes that the presentation of free cash flow, which it defines as the net cash provided by operating activities less cash used to acquire property and equipment, to be a liquidity measure that provides useful information to management and investors because of its intent to return a stated percentage of free cash flow to shareholders in the form of dividends and stock repurchases. Cisco further regards free cash flow as a useful measure because it reflects cash that can be used to, among other things, invest in its business, make strategic acquisitions, repurchase common stock and pay dividends on its common stock, after deducting capital investments.

For its internal budgeting process, Cisco’s management uses financial statements that do not include, when applicable, share-based compensation expense, amortization of acquisition-related intangible assets, impact to cost of sales from purchase accounting adjustments to inventory, acquisition-related/divestiture costs, significant asset impairments and restructurings, significant litigation and other contingencies, the income tax effects of the foregoing and significant tax matters. Cisco’s management also uses the foregoing non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Cisco. In prior periods, Cisco has excluded other items that it no longer excludes for purposes of its non-GAAP financial measures. From time to time in the future there may be other items that Cisco may exclude for purposes of its internal budgeting process and in reviewing its financial results. For additional information on the items excluded by Cisco from one or more of its non-GAAP financial measures, refer to the Form 8-K regarding this release furnished today to the Securities and Exchange Commission.

Cisco divested the Customer Premises Equipment portion of the Service Provider Video Connected Devices business (“SP Video CPE Business”) during the second quarter of fiscal 2016 on November 20, 2015. This release includes, where indicated, financial measures that exclude the SP Video CPE Business. Cisco believes that the presentation of these measures provides useful information to investors and management regarding financial and business trends relating to its financial condition and its historical and projected results of operations because the SP Video CPE Business will not be part of Cisco on a go forward basis. Cisco’s management also uses the financial measures excluding the SP Video CPE Business in reviewing the financial results of Cisco.

About Cisco

Cisco (NASDAQ: CSCO) is the worldwide technology leader that has been making the Internet work since 1984. Our people, products, and partners help society securely connect and seize tomorrow’s digital opportunity today. Discover more at thenetwork.cisco.com and follow us on Twitter at @Cisco.

Copyright © 2016 Cisco and/or its affiliates. All rights reserved. Cisco and the Cisco logo are trademarks or registered trademarks of Cisco and/or its affiliates in the U.S. and other countries. To view a list of Cisco trademarks, go to: http://www.cisco.com/go/trademarks. Third-party trademarks mentioned in this document are the property of their respective owners. The use of the word partner does not imply a partnership relationship between Cisco and any other company. This document is Cisco Public Information.

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CableLabs and Cisco Announce Open Source Software for Future of Virtualization in Cable

ORLANDO, CABLELABS WINTER CONFERENCE, February 10, 2016 – Cable operators around the world are faced with pressures to provide higher bandwidth transport for Internet, video and voice services. Most operators are opting for standardized, digital and fiber-based solutions that will help them reduce costs and future-proof their technology to support network demands.

Several years ago, the cable industry led the effort for a Converged Cable Access Platform (CCAP), to simplify cable headend operations and to move operators toward service convergence and IP video. CCAP combines edge QAM and cable modem termination system (CMTS) functions into one unit to help operators reduce power and space.

Soon after came the invention of one of several new access technologies called Remote PHY, contributed to CableLabs by Cisco’s John Chapman, Cisco Fellow and CTO of Cisco’s Cable Access business. Remote PHY works together with DOCSIS® 3.1, the latest specification designed by CableLabs, to expand capacity of the cable hybrid fiber coax (HFC) plants.

Today CableLabs and Cisco are announcing the creation of a new software project for the Remote PHY Device (RPD) labeled “OpenRPD” originally developed by Cisco and contributed to the open source environment hosted at CableLabs. The RPD is a physical layer converter commonly located in an optical node of the cable network.  This open source software will reside in the Remote PHY Device and will be available to cable operators and RPD vendors around the world.

It is designed to help further interoperability efforts and promote virtualization techniques to speed time to market with new services. With this new software, legacy optical node vendors can build Remote PHY nodes without restrictions or needing to be experts in the latest cable standards and specs.

“More and more of the telecommunications infrastructure is running on open source platforms,” said Ralph Brown, CTO, CableLabs. “CableLabs has a history of contributing to and hosting open source projects. The OpenRPD project helps launch CableLabs increased focus on open source projects for the cable industry.”

“This is open source for cable access. Not only does it help move the industry toward the future architecture but it also enables a new developer community,” said Dave Ward, CTO of Engineering and chief architect, Cisco. “Open standards, open source and an open ecosystem community for developers is a key trajectory for networking. We see the Remote PHY architecture and RPD evolving to a more generalized and virtualized architecture that can be applied to all types of access networks.”

“Our collaborative industry effort is about helping cable networks scale,” said Cisco’s John Chapman. “Remote PHY, OpenRPD and DOCSIS 3.1 are playing a pivotal role in expanding the capacity of the HFC plant in a reliable, cost-effective and scalable way.”

Supporting Resources

RSS Feed for Cisco: http://newsroom.cisco.com/dlls/rss.html

About Cisco
Cisco (NASDAQ: CSCO) is the worldwide leader in IT that helps companies seize the opportunities of tomorrow by proving that amazing things can happen when you connect the previously unconnected. For ongoing news, please go to http://thenetwork.cisco.com.

About CableLabs

Cable Television Laboratories (http://www.cablelabs.com), founded in 1988 by members of the cable television industry, is a non-profit research and development lab. CableLabs delivers innovations that enable cable operators to be the providers of choice in their markets. Cable operators from around the world are members.

CableLabs®  is a registered trademark of Cable Television Laboratories, Inc. Other CableLabs marks are listed at http://www.cablelabs.com/certqual/trademarks. All other marks are the property of their respective owners.

Cisco and the Cisco logo are trademarks or registered trademarks of Cisco and/or its affiliates in the U.S. and other countries. A listing of Cisco’s trademarks can be found at http://www.cisco.com/go/trademarks. Third-party trademarks mentioned are the property of their respective owners. The use of the word partner does not imply a partnership relationship between Cisco and any other company.

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Telefonica Offers Cisco Collaboration Cloud Services Portfolio

Madrid (Spain), February 15th, 2016. – Telefonica Business Solutions, a leading provider of a wide range of integrated communication solutions for the enterprise market, has become one of the first service providers to offer the Cisco® portfolio of collaboration cloud services as a fully integrated service.

Telefonica’s new offer brings together best-in-class and market-leading business collaboration applications such as Cisco Unified Communications, virtual contact center, Cisco TelePresence®, Cisco WebEx® and Collaboration Meeting Rooms, all delivered “as a service” to end-users over mobile and fixed connections.

Telefonica customers can take advantage of all the features and functionality of Cisco collaboration solutions as if they were installed on-premises, without incurring major capital expenditures and platform updating costs, using a flexible consumption model.

Highlights

Global scale reach. Telefonica offers its own branded collaboration services based on Cisco Hosted Collaboration Solution (Cisco Unified Communications, customer collaboration and telepresence as a service) and connects it to Cisco conferencing services from the Cisco Collaboration Cloud (WebEx, Collaboration Meeting Rooms, and WebEx Cloud Connected Audio). Cisco Hosted Collaboration Solution (HCS) is deployed in Telefonica’s data centers across the globe and is interconnected to Cisco’s data centers hosting Cisco conferencing services (two in the United States and two in Europe).Better productivity and agility. By using a simple subscription model, customers can improve both productivity and agility accessing the latest collaboration tools on demand, aligning with fast-moving business needs, and scaling with ease, with no capital investments.Anywhere, any device collaboration. Cisco Hosted Collaboration Solution (HCS) provides integration into Telefonica’s mobile networks, as well as highly secure remote access over the public Internet, to truly enable anywhere, any device collaboration. End users enjoy personalized collaboration tools in accordance with their profile, at any time and place and using any device.Simple-to-join meetings for everyone. Bring employees, customers, and partners together to collaborate from anywhere with integrated voice, video, and content sharing on any device. Cisco conferencing supports highly secure collaboration across devices, from mobile devices to desk phones to immersive telepresence systems in both scheduled and impromptu meetings.End-to-end management and security. Telefonica offers complete support and end-to-end management through a single provider and resilient data centers with the highest levels of quality, security and regulatory compliance.

Supporting quotes

Hugo de los Santos, Communication Services Director at Telefonica Business Solutions: “As a global company with a robust network spanning Europe, the Americas and Asia, we’re committed to give our customers more choice, flexibility and innovation. This new and holistic platform offers our customers and its final users flexible, economic, agile, efficient and highly secure Cloud Collaboration business services, enabling a new way of working and the best user experience regardless of location or device based on Cisco’s and Telefonica’s global reach and trusted services and solutions.”Scot Gardner, Vice president, Global Service Provider segment, Cisco EMEAR: “Telefonica and Cisco have worked together over many years to address the most critical collaboration needs of businesses around the world. Customers want collaboration tools to increase their productivity, but they also require them to be highly secure, cost effective and easy to deploy and easy to use. Cisco Hosted Collaboration Solution and Cisco conferencing solutions have been developed with services providers like Telefonica in mind so that their end-customers can enjoy industry-leading, highly secure collaboration applications delivered as a service anywhere in the world over the service providers’ cloud infrastructure”.

Supporting resources

About Telefonica Business Solutions

Telefonica Business Solutions, a leading provider of a wide range of integrated communication solutions for the B2B market, manages globally the Enterprise (Large Enterprise and SME), MNC (Multinational Corporations), Wholesale (fixed and mobile carriers, ISPs and content providers) and Roaming businesses within the Telefonica Group. Business Solutions develops an integrated, innovative and competitive portfolio for the B2B segment including digital solutions (Cloud and Security) and telecommunication services (international voice, IP, bandwidth capacity, satellite services, mobility, integrated fixed, mobile, IT services and global solutions). Telefonica Business Solutions is a multicultural organization, working in over 40 countries and with service reach in over 170 countries.

Follow us on: Twitter: @telefonicab2b LinkedIn: Telefonica Business Solutions YouTube: Telefonica Business Solutions.

About Cisco Collaboration

From award-winning IP communications to mobility, customer care, web conferencing, messaging, and interoperable telepresence experiences, Cisco brings together network-based, integrated collaboration solutions based on open standards. These solutions offered across on-premises, cloud-based or virtualized platforms, as well as services from Cisco and our partners, are designed to help promote business growth, innovation and productivity. They are also designed to help accelerate team performance, protect investments, and simplify the process of finding the right people and information.

About Cisco

Cisco (NASDAQ: CSCO) is the worldwide leader in IT that helps companies seize the opportunities of tomorrow by proving that amazing things can happen when you connect the previously unconnected. For ongoing news, please go to http://thenetwork.cisco.com.

Cisco and the Cisco logo are trademarks or registered trademarks of Cisco and/or its affiliates in the U.S. and other countries. A listing of Cisco’s trademarks can be found at http://www.cisco.com/go/trademarks. Third-party trademarks mentioned are the property of their respective owners. The use of the word partner does not imply a partnership relationship between Cisco and any other company. 

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Blockchain technology ushers in the “Internet of Value”

It was the buzz at the recent World Economic Forum in Davos. Wall Street banks are pouring money into it. And Mark Andreesen has called it the most important technology since the Internet itself.

What is it? The blockchain, of course.

Created by the mysterious hacker known as Satoshi Nakamoto, the blockchain—the distributed ledger technology that underlies the Bitcoin virtual currency—Blockchain has the potential to upend industries from finance to real estate to entertainment. has the potential to upend industries from finance to real estate to entertainment. That has Silicon Valley titans, global finance leaders and even indie artists scrambling to grasp the implications of the technology—and make sure they aren’t broadsided by it.

Tim Swanson, head of research at R3, a New York technology startup backed by a consortium of big banks, has described the blockchain as being “a bit like gluten—everybody is talking about it but no one knows what it is in great detail.”

In the simplest terms, the blockchain transfers value from one party to another over the Internet. That could be money, a share of stock, a property deed, a digital royalty—even a vote cast in an election.

Today, such transactions often pass through multiple intermediaries to be validated, cleared and processed, and are stored in central ledgers maintained by an authority, such as a central bank in the case of financial transactions or the Mortgage Electronic Registration System (MERS) for mortgages.

The blockchain distributes the validation and storage of transactions over many computers in a secure and public way, eliminating the need for a middleman. In doing so, it drastically reduces the time and cost to process a transaction to close to zero.

Alex Tapscott, CEO of Northwest Passage Ventures, an advisory firm in the blockchain space and author of an upcoming book on the subject, says blockchain technology represents the next generation of the Internet, what he calls the Internet of Value.Blockchain technology represents the next generation of the Internet- the Internet of Value.

While the technology—both the original Bitcoin blockchain and new variations of it—has sweeping potential to transform vast sectors of the economy, says Tapscott, the first blockchain applications are taking root in two areas: financial services and creative industries such as music and media. 

As a ledger system, the blockchain’s most obvious application is in finance, and banks have awoken to the threat and opportunity it poses. R3CEV, a blockchain technology company owned by a consortium of banks, has grown from nine members at its founding in September 2015 to more than 40 today. By one estimate, Wall Street spending on blockchain could reach $400 million in the next few years. By one estimate, Wall Street spending on blockchain could reach $400 million in the next few years.

Consider stock trading. In a market where competitive advantage is measured in nanoseconds, trades can still take up to three days to settle, notes Tapscott. Blockchain-based systems could cut that to seconds or minutes. That’s especially attractive for complex trades such as derivatives, where market conditions can change before a trade is settled, creating substantial counterparty risk. 

The Commodity Futures Trading Commission is studying the potential application of distributed ledger technology to the derivatives market. And Nasdaq recently conducted its first trade using the blockchain. “Through this initial application of blockchain technology, we begin a process that could revolutionize the core of capital markets infrastructure systems,” said Nasdaq CEO Bob Greifeld in announcing the milestone. “The implications for settlement and outdated administrative functions are profound.”

Another financial market ripe for disruption is foreign exchange and cross border remittance. Nearly $500 billion a year is transferred between countries, often by people working abroad that send money home to relatives. That process is slow and cumbersome, with high fees that take a painful bite out of hard-earned savings. A startup called Abra has created a mobile app that uses the blockchain to streamline the remittance process, allowing individuals to transfer money from one continent and currency to another instantaneously and without hefty fees.

By collapsing the time and cost of a transaction, distributed ledger technology paves the way for true micropayments in increments as small as a penny. Such micropayments are seen as the Holy Grail for creative industries such as music and media that have been pummeled by the harsh economics of the Internet and an outmoded royalty payment system.

Blockchain-enabled technology could allow new artist-friendly business models to flourish. For example, musicians might be paid, say, a nickel every time someone listens to a song. Journalists, likewise, might be paid a few cents every time someone reads an article. Artists, most notably Grammy award winner Imogen Heap, are exploring the use of blockchain for music distribution and compensation.

Many creative assets, from films to songs, are produced by a team, and the blockchain could make tracking and paying royalties to these contributors more efficient and transparent.

Blockchain technology is still new, and like gluten, it has received a fair amount of hype. There are issues to be worked out—such as whether blockchain ledgers will scale without being overwhelmed. But these are “implementation challenges” that can be solved, says Tapscott.  Blockchain, he says, “is a big breakthrough that could ultimately change the nature of business and the corporation itself.”

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The contents or opinions in this feature are independent and may not necessarily represent the views of Cisco. They are offered in an effort to encourage continuing conversations on a broad range of innovative technology subjects. We welcome your comments and engagement.

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About Amy Cortese @locavesting

Amy Cortese is an award-winning journalist and the author of Locavesting (Wiley, 2011)

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Hybrid flash array roundup 2016

As most discussions in storage now focus on all-flash, you could be excused for thinking hybrid flash storage is a shrinking part of the market. This doesn’t seem to be the case, however, and this year we add another three hybrid flash startup suppliers since our last roundup. 

Hybrid flash storage uses a combination of flash and spinning-disk hard drives (HDDs) to create a platform that offers better performance than a traditional HDD-based array but is a cheaper option than moving to all-flash.

In hybrid systems, flash is used to target “hot I/O”, or just that data that needs a fast response time at any given time. This design assumes that only a percentage of data is active at any one time, which would make an all-flash system a waste of resources.

Before diving into the product roundup, it’s worth noting that, slowly but surely, hybrid flash suppliers are moving into the all-flash market. Coho Data, Tegile, Tintri and X-IO all have all-flash solutions that sit alongside their hybrid counterparts.

The emergence of high-capacity flash (in the form of 3D, TLC and eventually QLC NAND) means the hybrid market may continue for some time to come with products that combine high endurance and high-capacity flash.

Coho’s storage platform is a scale-out solution based on the MicroArray, a server node that comes in all-flash and hybrid flash versions. Since our last review, Coho has announced the availability of an all-flash node, the 2000f. On the hybrid side, the existing models (1008h, 1000h, 800h) have been enhanced to take advantage of 8TB helium-filled HDDs.

The remaining product enhancements were all software-based through three releases of the DataStream platform operating system (OS). Software updates in May, July and November 2015 introduced data compression (using the LZ4 algorithm), asymmetric configuration support (ie, the ability to mix and match node types in a single cluster), support for vSphere 6 and VMware Site Recovery Manager.

There were also a host of user interface updates and the release of PowerShell tools for hardware management.

Data Gravity is the first of this year’s new entrants. The startup offers hybrid storage solutions that are “data-aware” and capable of looking into the content of files and virtual machines to expose analytics information for a range of purposes, including identification of sensitive data, understanding data access patterns for better performance, and recovery of data at a more granular level.

The Data Gravity storage platform uses a dual-controller architecture, one of which actively serves data while the other manages the analytics process. Currently, there are four models – from the entry-level DG1100 (18TB HDD storage, 1.2TB flash) all the way up to the DG2400 (96TB HDD, 4.8TB flash). All models support SMB (v1.0, v2.0, v2.1) and NFS (v3, v4) protocols.

Infinidat is another new startup being reviewed this time. The company founders (including Moshe Yanai) have a strong pedigree in the storage industry, having developed the Symmetrix platform for EMC and founding XIV, which was eventually sold to IBM.

Infinidat offers high capacity, high performance (up to 750,000 IOPS, high throughput of 12Gbit/s) and high availability (99.99999% – seven nines), which it calls mainframe levels of performance and availability engineered for enterprise users to handle web-scale operations.

It does this by breaking the mould for enterprise storage in a number of ways. Its Infinibox comes with three controllers in an active-active-active architecture. They contain DRAM and flash, with all active data held in these two layers, while below that are huge amounts – 480 nearline-SAS HDDs – of spinning disk.

The Infinibox platform comes in two models. The F2000 entry-level system provides 250TB (using 3TB drives) or 330TB (4TB drives) of storage in 18U, using up to 38TB of flash and 576GB of system memory. Infinidat claims up to 500,000 IOPS from the F2000 with a throughput of 7Gbit/s. The original F6000 series provides up to 2PB of capacity in a single 42U rack, with 86TB of flash and 2.3TB of system memory. F6000 systems achieve a claimed 900,000 IOPS and throughput of 12.5Gbit/s.

NexGen Storage was acquired by Fusion-io in 2013 and subsequently acquired by SanDisk. NexGen was spun out of SanDisk in 2014 and has subsequently been acquired by Pivot3. The company offers all-flash and hybrid flash solutions that focus on delivering application performance through quality-of-service features. The NexGen platform is relatively unusual in that the hybrid models deliver flash using PCIe SSD rather than traditional HDDs (a reflection of the heritage of the company).

There are currently four hybrid flash models available (N5-200, N5-300, N5-500, N5-1000). These scale from 2TB to 7.2TB of flash with 32TB to 128TB of disk (NS-200) delivering a claimed 150,000 IOPS and 2Gbit/s throughput. At the top end the N5-1000 system uses between 10.4TB and 15.6TB of flash combined with 63TB to 256TB of HDD and delivers up to 250,000 IOPS with 3Gbit/s throughput.

Nimble continues to offer hybrid solutions based on four product families. The value CS200 systems scale from 8TB to 24TB (raw) or 140TB to 28TB effective capacity after space reduction techniques have been applied, and incorporate up to 1.2TB of flash. The CS300 (base performance family) scales from 12TB to 72TB of disk and up to 3.8TB of flash. The CS500 (high performance) scales from 12TB to 72TB but offers double the maximum flash capacity at 7.7TB. The CS700 (extreme performance) also scales from 12TB to 72TB with 7.7TB of flash and has the option to be configured as a scale-out four-node cluster with a maximum capacity of 3.5PB and 160TB of flash.

During the year Nimble has added the capability to pin workloads permanently to flash, creating what the company terms an “all-flash service level” for applications. There have also been enhancements to the InfoSight management platform to controls at the virtual machine (VM) level and the introduction of REST-based API management.

Reduxio is the third new entrant to the hybrid market and claims to offer all-flash performance in its 2U hybrid dual-controller appliance. The HX550 system scales up to 38.4TB in capacity (120TB-plus effective after space reduction technologies are applied) with 6.4TB of eMLC flash.

A new hybrid appliance won’t survive in today’s market based solely on hardware features, so Reduxio has focused on data services. This includes BackDating, a feature that delivers built-in CDP (continuous data protection) down to one-second granularity.  There is also in-line data deduplication and compression, and thin snapshot/clone technology.

Tintri’s technology focuses on the management of data in virtual server environments, with intelligence in the platform OS software that can understand and manage VMs at a very granular level.

New hardware releases in the past 12 months have focused on the all-flash version of the VMstore platform, with no major hardware upgrades being released for the hybrid products. The T800 hybrid series (T820, T850 and T880) scale up to 100TB of effective capacity, with typically around 10% of flash to HDDs and the ability to support up to 3,500 VMs with a single 4U system.

Tintri continues to expand support for multiple hypervisors through the addition of XenServer to complement existing support for VMware vSphere, Hyper-V, RHEV and OpenStack. VVOLs support has also been added, even though VMstore natively supported virtual machines as a core feature.

Tegile has refreshed and restructured its product range and now offers four hybrid and three all-flash configurations. The hybrid systems are classified as capacity-optimised (T3100), balanced (T3200), performance-optimised (T3300) and max performance and capacity (T3400). The T3100 starts at 26TB and scales to 170TB (raw) with 750GB of flash. The T3200 offers 36TB to 180TB with 2TB of flash. The T3300 scales from 18TB to 162TB (raw) with 1.5TB of flash. At the high end, the T3400 offers 26TB to 314TB of raw capacity with 28.8TB of flash.

Tegile has moved most hardware models to 2U, except the T3100 and T3200 models, which are presumably due a refresh to bring them in line with the physical characteristics of the rest of the product range.

X-IO Technologies announced two new products over the last 12 months: an all-flash version of its existing ISE (Intelligent Storage Element) technology, and Iglu Blaze, a dual-controller SAN solution based on ISE hardware.

Iglu Blaze was added to the X-IO portfolio last summer. The new hardware brought an extra controller layer with advanced storage features including asynchronous replication, disaster recovery and high availability.on top of its existing ISE self-healing HDD, flash or hybrid storage arrays.

Recently, X-IO upgraded the product to Iglu Blaze FX, which can handle up to 366TB of flash capacity, 411TB in hybrid flash configuration and 846TB with X-IO’s self-healing Datapac HDDs. 

I/O performance of Iglu Blaze FX is 600 IOPS per dual-controller stack. The upgrade also saw the addition of stretch clustering with high-availability clusters of up to 100km and latency up to five milliseconds possible.

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Case study: SEO startup uses Elastichosts’ containers to solve cloud app scalability issues

Enterprise website auditor Seopler.com has highlighted the challenges startups face around billing and support when building a business in the cloud.

The Dublin-based startup’s website-crawling software is used by enterprises such as Nissan Ireland to sniff out broken links, site redirects, invalid HTML markups and other elements that could adversely affect how highly their pages are ranked by search engines.

Once a site crawl is completed, a PDF is generated and sent to the user advising them of the corrective action they must take to improve the search engine optimisation (SEO) credentials of their website.

The compute resources that the Linux-based software carrying out the crawl requires to do its job varies depending on the size of the website and how many pages it contains, which is one of the reasons why Seopler decided to run the software in the cloud.

Also, the company rarely gets much prior warning about the size of the website it will be called upon to audit before a customer enlists its help, which makes it difficult to know how much compute power will be needed to perform its tasks.

“As Seopler crawls larger websites, the more data it needs to collect, and we used SQLite databases and kept those in-memory, so it’s very fast to collect that data when it crawls the site,” Graham O’Shea, the company’s CEO, told Computer Weekly.

Time is of the essence during the process, because the longer a crawl takes, the more likely it is to cause a level of disruption to the website undergoing the audit.

In the lead-up to the company’s launch last year, O’Shea set about finding a suitable infrastructure-as-a-service (IaaS) platform to run the software on, and initially opted for Amazon Web Services’ EC2 service.

However, the unpredictability of the size of each job undertaken by Seopler’s software created some unforeseen problems when it came to costs and resource provisioning.

“The problem with Amazon EC2 was we had to specify them before we did a crawl and, based on a million- page website, we would have had to commission an EC2 virtual machine with 8GB of RAM and 50-60GB of hard disk space before we ran the job,” he said.

“It started off and it looked quite cheap, but when the bills started coming in, we realised this isn’t going to work for us in the long term because you have to pay extra for support in the long term.

“Also, we don’t know the client’s website. They sign up for it at a switching level, and we don’t know what size their site is. So to do that for each client is really expensive. We tried it with Azure, and it was the same thing.”

While the company was working through these challenges, it had the added pressure of needing to have a workable demo in place to present to the crowd at the Web Summit Conference in Dublin on 3 November 2015.

Seopler was already using Elastichosts and its cloud servers to stand up some of its websites, so O’Shea and his team decided to give its container service a go.

“To be honest, it was there staring us in the face all the time, in that they had this new container service they had launched, and we didn’t really understand it,” he said. “It was only after going down the EC2 and Azure route that we worked out that it did exactly what we were looking for.  

“We were able to set up the scripts to build everything in a day, whereas with Azure or EC2 it took a week or more, and it still didn’t do exactly what we needed it to do.”

The Web Summit deadline was met comfortably, and now Seopler, having worked through its hosting challenges, is looking to build out the software’s functionality and expand its operations overseas with the help of Elastichosts’ international datacentres.

“When someone performs a crawl, we want that done as quickly as possible, no matter where they are in the world,” said O’Shea. “So, if we get a subscriber in the US, we will automatically put them on a server being run out of the US. That will just accelerate the crawl and speeds things up because they’re performing it local to them.” 

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Interview: Digital Marketplace director Tony Singleton on why he is leaving G-Cloud

On the same day the Cabinet Office confirmed that £1bn worth of public sector IT purchases had been made through the Digital Marketplace, Computer Weekly received word that Tony Singleton, OBE – the man responsible for running it – was moving jobs.

After several years heading up the Digital Marketplace team within the Government Digital Service (GDS), Singleton is off on a “three-year loan” to work as operations director for the Department for Business, Innovation and Skills’ (BIS) new digital group.

The timing of his departure may strike some as a little strange, given the praise recently heaped on Singleton and the wider Digital Marketplace team for the work they have done to simplify how the public sector buys IT services.

Indeed, in the wake of the Digital Marketplace’s £1bn sales milestone being announced, both government CTO Liam Maxwell and Cabinet Office minister Matt Hancock were quick to talk up the work of Singleton and his team at the Sprint 16 conference. 

Speaking exclusively to Computer Weekly, Singleton says Whitehall’s championing of what the Digital Marketplace team do made the decision to leave easier, and should ensure they have all the support they need to bring in the next £1bn of public sector IT spend.

“There is such a strong team in place here, and I know we are leaving it in safe hands,” he says.

During his two-and-a-half-year tenure, Singleton has overseen the introduction of the Digital Marketplace, as well as its expansion into an online procurement hub for a wide range of public sector IT services.

Its forerunner, CloudStore, served solely as an online storefront for the G-Cloud supplier community, whereas the Digital Marketplace has been expanded to include the Crown Hosting Datacentre Framework, plus the soon-to-be-launched Digital Outcomes and Specialist Framework.   

With Singleton due to start his new job on 1 March, he says Digital Marketplace users can expect to see the scope, scale and functionality of it continue to expand long after he goes.

“Having just come through the Spending Review, and putting together and developing our business plan for the next 12 months, and for the three years after that, now is really the time to hand that over to someone else to deliver and start work on their vision,” says Singleton.

“The sort of things we were developing were around really building on the success of what we have achieved to date, and looking at redesigning and redeploying other frameworks on there.”

It just makes sense to look at the best way to put in place the vehicles for the public sector to buy what they want to buy Tony Singleton, Government Digital Service

As part of this, the Digital Marketplace team is already in talks with Iain Patterson, who recently returned to GDS as director of Common Technology Services (CTS), about incorporating the procurement of offerings that fall under his programme’s remit in it.

“It just makes sense to look at the best way to put in place the vehicles for the public sector to buy what they want to buy, and part of that is looking at what else should be on there, in terms of Common Technology Services and so on,” he says.

“So, instead of the Digital Marketplace being thought of as ‘just G-Cloud’, there is so much more we should be looking at to build on the model we’ve already got in place.”

Singleton was already working at the GDS when it was decided to place G-Cloud under its control in the summer of 2013, paving the way for his appointment as the procurement framework’s director.

The framework had been up and running for about 16 months, generating around £33m in public sector cloud spend. Now, just over 95% of the £1bn generated by the Digital Marketplace can be attributed to sales via the G-Cloud framework.

“It is looking back on those sorts of things and what we as a team have achieved that I am most proud of,” says Singleton. “We found out what our users need, where things need to be improved and then look to address how best to go about fixing things.”

Over the same period, the number of suppliers offering their wares through the framework’s four Lots has increased from 257 to 2,500, and the number of these that regularly clinch deals through G-Cloud has risen steadily from 178 to 673.

Supplier involvement has been critical to the success of G-Cloud, says Singleton, and not just because there would not be anything for the public sector to buy if they did not choose to flaunt their wares in the Digital Marketplace.

“They’re really big advocates for what we are doing, and I speak to as many as I can as frequently as my diary allows, because there is always more to learn about what we can do to meet the needs of buyers and suppliers better,” he says.

That is the reason why his successor, Warren Smith – head of strategy and commissioning at the Digital Commercial Programme – has already started taking steps to build relationships with the supplier community, says Singleton.

“They won’t always get what they want, but we do listen and I always think it’s important to explain, if we have to say no to something they have asked for, the reasons why,” he says.

The number of public sector organisations using the framework has risen from 278 when Singleton took over to more than 1,000 now, with 75% of total sales through the framework – as of February 2016 – coming from central government departments.

Getting more local authorities and NHS organisation to use G-Cloud is an ongoing growth priority for the framework, and is another area Singleton says his successor and the rest of the Digital Marketplace team will be seeking to address in the months and years ahead.

“We need to look further into how we get into the wider public sector, in terms of local authorities and the health service”

Tony Singleton, Government Digital Service

This has already seen GDS take steps to cultivate closer ties with SOCITM, the professional body representing public sector IT workers, and the team there is now actively looking for organisations of a similar ilk to work with, he says.

“We need to look further into how we get into the wider public sector, in terms of local authorities and the health service,” says Singleton. “How do we finally crack that and get them to use it properly?”

Over the next 12 to 18 months, another priority for the Digital Marketplace team will be to address supplier demands for an Amazon.com-style shopping cart to be introduced that would make it easier to keep tabs on who is buying what.

“What we want to do is look at how we can deliver an entire end-to-end service for digital products on there, including integrating purchase-to-pay systems, but we need to work out a strategy about how best to do that first,” says Singleton.

But with so much more work still to do, is Singleton not tempted to stay on at GDS and see all these projects and initiatives through to fruition?  

“The decision to leave was not an easy one,” he says. “I was asked just before Christmas if I would like to go over and work for this new Department for Business, Innovation and Skills digital group and help set it up in the same way I did with GDS.”

In 2011, Singleton was brought in to help shape the future of GDS, which started life as a startup comprising people working within various, disparate parts of the Cabinet Office who were  tasked with championing the government’s digital-by-default agenda.

By the time he became the programme director of G-Cloud, the GDS team had grown from 80 to 500 people, and was a “mature business”.

A similar challenge awaits him at BIS for the next three years, where he will be responsible for helping the department’s burgeoning digital arm get up and running.  

“Every government department is different, with its own rules and ways of working, so it’s a fresh challenge from that perspective, but – most importantly of all – taking something through such a major business change is the kind of thing I really enjoy doing,” says Singleton.

“Then I’ll come back in three years and pick up in the Cabinet Office whatever there is to pick up and take forward.”

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