Long story short: I think that, in the next year, we will see a marked shift toward subscription pricing. Amazon pushing subscriptions. Dollar shave club for X. Same for Cisco - getting recurring revenue through security/SDN/SaaS subscriptions rather than one-time hardware sales seems to be a safer long-term bet.

To guess, I think it is because Cisco will pursue a strategy of software defined networking. That means more consolidated hardware development by fewer employees.

I don't think commodity hardware will fully replace all business of places like Cisco. For one, Cisco does have large contracts like the Chinese Government -- they helped build the "great firewall".

I have no idea how this shakes out. But multiple companies in the traditional skew/license business are having to adjust (as others stated) to a different world.

Look at all of the recent acquisitions:

https://en.wikipedia.org/wiki/List_of_acquisitions_by_Cisco_...

And look at the strategy playing out:

https://blog.opendns.com/2016/07/08/new-integration-anyconne...

Call center software.

Cisco is probably seeing their margins being eaten by commodity competitors.

In the past, i would agree. There seems to be a push into by the military industrial complex into "Cyber Warfare", so i think Cisco is angling for some Government contracts.