Cisco CEO Chuck Robbins wants data centers in space

Summary

Decoder with Nilay Patel

Episode: Cisco CEO Chuck Robbins wants data centers in space

Date: April 6, 2026
Guest: Chuck Robbins (CEO, Cisco)
Host: Nilay Patel (Editor-in-Chief, The Verge)

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Episode Overview

This episode dives into Cisco’s vision for networking infrastructure amid an explosion of AI-driven demand and the hurdles facing data center expansion—both politically and technically. Chuck Robbins, CEO of Cisco, joins Nilay Patel to tackle provocative questions: Should we build data centers in space? Is AI a bubble? How does Cisco navigate a world where no one wants data centers in their backyard—and what does the future of the global Internet look like given geopolitical and technological pressures?

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Key Themes & Discussion Points

1. Data Centers in Space: Pipe Dream or Inevitable Future?

• Robbins voices strong enthusiasm for the idea of data centers in space, citing power constraints and community opposition as major drivers. He thinks the idea will happen “absolutely, yes.”
  • “Right now we're dealing with lots of power constraints and up there you don't have that.” (Chuck Robbins, 05:27)
• Space affords unlimited solar power and sidesteps local resistance to data center construction.
• Cisco is actively preparing for this scenario, although it’s in early stages. Challenges like cooling in a vacuum and adapting networking stacks for satellite tech are being evaluated.
  • “Our teams came to me... and said we really have to be prepared for data centers in space. And I looked at him like he was crazy.” (Chuck Robbins, 06:37)

2. Data Center Political Backlash and the Drive for Alternatives

• AI data centers are facing robust, bipartisan local opposition in America—issues include noise, energy usage, raised power rates, and general NIMBYism.
• Nilay presses on whether moving to space is simply escapism from Earth-based politics; Robbins frames it more as a practical solution to physical and community constraints.

3. Cisco’s Evolution: Boom, Bust, and AI

• Cisco once briefly became the world’s most valuable company during the dot-com boom. Robbins draws explicit parallels between the AI surge and earlier tech bubbles.
  • “Infrastructure's cool again, you know.” (Chuck Robbins, 09:41)
• Cisco’s unique differentiation comes from controlling its own networking silicon (“one of basically three companies in the world that can build a networking silicon that that's needed to connect these GPUs,” 12:54).
• The AI data center buildout is already fueling double-digit growth for Cisco’s enterprise data center business.

4. Competition and Co-opetition: Cisco, Nvidia, and Hyperscalers

• Discusses deepening “coopetition” with Nvidia—while Nvidia’s network revenue has surpassed Cisco’s, especially through integrated solutions, Robbins stresses Cisco’s entrenched enterprise relationships and security as its unique value.
  • “We're the only networking company that has a big security business and none of our security competitors have a networking business. So it's a big advantage to us as we go forward.” (Chuck Robbins, 14:46)

5. AI: Bubble or Reality?

• Robbins is frank: AI “is a bubble”—at least in the sense that huge investments will have winners and losers, just like the dot-com era.
  • “People lost money and. But the winners emerged. And I think you're going to see the same thing here.” (Chuck Robbins, 15:53)
• Key distinction: Unlike fiber built in the dot-com era that sat dark for years, today's data centers “are being used day one at full capacity.” (Chuck Robbins, 17:18)
• The unpredictable pace of AI, with major pivots happening every few weeks (“we'd have meetings... and three weeks later, we throw it out and start over again,” paraphrasing OpenAI's Kevin, 19:15), is changing product design and silicon development.

6. Hardware and Resource Crunches: Silicon, RAM, and Margins

• Global shortages of chips and RAM are constraining capacity. Cisco is weathering this by passing on upstream price increases transparently to hyperscaler customers.
• Margins are squeezed but Cisco's networking gear is less affected than compute platforms due to lower RAM requirements.
  • “Networking equipment uses a lot less memory than compute platforms do, obviously.” (Chuck Robbins, 21:43)

7. Organizational Change: AI-Driven Productivity and Workforce Impact

• The rise of AI code generation is fundamentally changing Cisco’s engineering org—by next year, up to 70% of code could be AI-written, though it must go through rigorous testing.
  • “Companies are going to have to decide, am I going to maintain the same pace of innovation with half the people? Or am I going to double my pace of innovation with the same number of people?” (Chuck Robbins, 29:00)
• Security remains critical: Cisco is exploring how to use AI both to improve software reliability and find vulnerabilities.

8. Security, Agents, and Future Risks

• As AI agents proliferate, new security vectors emerge, prompting Cisco to advocate for greater real-time threat intelligence sharing across the industry.
  • “Any one of us on our own is going to be less effective than all of us together.” (Chuck Robbins, 32:17)
• The need for "kill switches" at the network layer for rogue agents was discussed, with Cisco positioned to partner with identity companies like Okta.

9. Decision-Making in Uncertainty

• Robbins’ framework: “Team-based strategy,” candid debate, and decisive risk-taking. FOMO is driving C-suite investments; "comfortable being uncomfortable" is now required.
  • “Used to say get 80% of the information you can and then make the decision, then adjust as you go. ... You're going to have to be willing to take risks and you got to be comfortable being uncomfortable.” (Chuck Robbins, 36:00)

10. Geopolitics and the Fragmentation of the Internet

• Globalization is reversing: countries and regions seek data sovereignty, requiring Cisco to develop products architected for local control, not global scale.
  • “No country... wants any other country to have the ability to cut off their access to use these platforms.” (Chuck Robbins, 46:59)
• This is a move from cloud-first, global instances to more compartmentalized systems.

11. Edge vs Data Center: The Next Battleground?

• Inference workloads and edge compute may be as big, or bigger, than training in future AI deployment—great for Cisco’s business due to increased network complexity and breadth.

12. The Public Backlash: Data Centers and the Consumer Case

• Data center construction faces worsening community opposition, unrelated to the classic American “environmental debate”; the issue is seen as utility inflation, low job creation, and questionable consumer benefit.
  • “...If you give some of those residents the greatest AI tools on their phone... they still don't want the data center in their backyard." (Chuck Robbins, 40:32)
• Robbins argues that public buy-in might require tangible local benefits beyond consumer tech, like improved utility infrastructure.

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Notable Quotes & Memorable Moments

• On Data Centers in Space: “Absolutely, yes. And we will.” (Chuck Robbins, 05:25)
• On betting who’ll get it done in space: “Yeah, I wouldn't bet against Elon.” (Chuck Robbins, 09:16)
• On Cisco’s mission: “We securely connect everything. I mean, that's basically what we do.” (Chuck Robbins, 09:47)
• On AI’s bubble nature: “People lost money and. But the winners emerged. And I think you're going to see the same thing here.” (Chuck Robbins, 15:53)
• On organizational adaptation: “Am I going to maintain the same pace of innovation with half the people? Or am I going to double my pace of innovation with the same number of people?” (Chuck Robbins, 29:00)
• On security collaboration: “Any one of us on our own is going to be less effective than all of us together.” (Chuck Robbins, 32:17)
• On decision-making in chaos: “You’re going to have to be willing to take risks and you got to be comfortable being uncomfortable.” (Chuck Robbins, 36:00)
• On internet fragmentation: “For most of the functionality that we use the Internet for today. I'm not sure it's going to change much to be honest. ... But I think you get into times of crisis and that's when you might see things happen differently.” (Chuck Robbins, 50:24)
• On public resistance to data centers: “I think the issue is the concern over the inflationary pressure that it puts on utilities and the things that they need.” (Chuck Robbins, 60:17)

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Timestamps for Key Segments

| Topic / Segment | Timestamp (MM:SS) | |--------------------------------------|----------------------| | Introduction and context | 01:55 - 04:52 | | Data centers in space discussion | 05:25 - 09:19 | | The boom-bust nature of Cisco | 09:19 - 10:42 | | AI fueling infrastructure growth | 10:42 - 15:53 | | AI as a bubble? | 15:53 - 17:49 | | Silicon, RAM, and supply crunch | 20:16 - 22:37 | | Cisco’s org and AI workforce impact | 27:41 - 32:04 | | Security, kill switches, Okta | 14:54 - 15:18; 32:04 - 33:22 | | Decision-making in uncertainty | 33:22 - 36:51 | | Consumer vs enterprise AI uses | 37:55 - 41:12 | | Comparing 5G/6G, AI for consumers | 41:12 - 43:04 | | Internet fragmentation & sovereignty | 46:01 - 50:24 | | Data center resistance & outcomes | 58:19 - 60:49 | | The future of Cisco | 61:03 - 61:41 |

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Final Thoughts: The Decoder Takeaways

• Cisco sees the AI-fueled data center wave as a durable trend—but is building hedges for a more fragmented, geographically isolated Internet.
• Robbins is bullish on data centers in space, open about the AI bubble risk, and views local opposition as a practical headache, not just political.
• The company is adapting rapidly: from silicon R&D and edge compute, to changing orgs for the agentic era, and building for a multipolar world.
• Despite massive uncertainty, Cisco’s approach is calculated risk-taking, rapid product pivots, and a focus on security as a lasting enterprise differentiator.

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Transcript

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[Nilay Patel]

Hello and welcome to Decoder. I'm Nilai Patel, editor in chief of the Verge and Decoder is my show about big ideas and other problems. Today I'm talking with Chuck Robbins, the CEO of Cisco. Cisco is one of those big companies that everyone has heard of but most of us don't have to interact with very much. This is not really a consumer brand, but all of us are in some way using Cisco's products and services every day because Cisco makes a huge amount of networking equipment for other big companies like telecoms and ISPs. It's a lock that somewhere between me recording this and you listening to it, that the bits have passed through Cisco's products. Without the actual routers and switches and silicon and the software to make those things work, there's no Internet, there's no cloud, and there's no AI. That's Cisco's big new business, of course, building all of the networking needed inside all of the data Centers that the AI companies are trying to build. And of course, Chuck and I spent a lot of time talking about that. Most importantly, I wanted to know where he thinks we should build all of these new data centers, because it's not clear that anyone really wants them around. A data center is fundamentally an unpleasant neighbor to have. They're loud, they're ugly, and they use a lot of electricity, making rates for regular people go up. And now AI itself is pulling pretty badly across America. So there's fairly robust bipartisan opposition to new data center builds all over the country. So of course, I asked Chuck the obvious first question. Should we build data centers in space? Elon Musk obviously seems to think so, and he's pushing SpaceX in that direction, promising a million data centers in space. On the other hand, Sam Altman, along with a whole bunch of experts who understand space well, they think we're not there yet. So I asked Chuck which way he's leading, and I think you'll be a little surprised at how quickly and emphatically he answered. You'll also hear me ask very directly whether Chuck thinks AI is a bubble. And you'll hear him say very directly that he thinks it is. And he would know. During the dot com bubble, Cisco, which builds networks, was briefly the most valuable company in the world. Chuck has seen a lot of ups and downs. But while AI is in the news, one of my favorite things to do on Decoder is bring big companies that are kind of hidden in plain sight out into the open. Cisco is a perfect example. Chuck has made some big bets around chip investments and positioning Cisco on what he calls the leading edge, but not the bleeding edge. That's really fascinating when you think about the kind of infrastructure that he sells to companies all over the world. These companies are dealing with an increasingly fractured global landscape, and those companies and their governments are asking big questions about who owns data, where it can be stored, whether the Internet in all those countries should have independent kill switches. Those are all important questions that are being asked every day, and they don't have easy answers. You'll hear Chuck really dive into how complicated it is keeping the world connected in the deeply weird reality of 2026. Okay, Cisco CEO Chuck Robbins, here we go. Chuck Robbins, you're the CEO of Cisco. Welcome to Decoder.

[Chuck Robbins]

It's great to be here. Thank you.

[Nilay Patel]

I'm excited that you're here in person. I have a lot of questions for you. It seems like a very complicated time to run an infrastructure company, which is fundamentally what Cisco is, especially an Infrastructure company for global infrastructure. Like the Internet's a global network. And that seems under a lot of pressure from a lot of different directions. So I want to get into a lot of things with you, but I actually want to start with just a question I've been dying to ask you ever since we scheduled this interview. I thought, finally I can ask this question and someone will be able to tell me the answer. Should we put data centers in space?

[Chuck Robbins]

Absolutely, yes. And we will.

[Nilay Patel]

You think so?

[Chuck Robbins]

Yeah, I think so. You're, you're, you know, right now we're dealing with lots of power constraints and up there you don't have that. And if you think about the people who are talking about putting data centers in space, I wouldn't doubt them. So.

[Nilay Patel]

So the Elon.

[Chuck Robbins]

Yeah. And there's a, there's a lot of stuff we're working on right now. We're thinking through relative to what we need to do to our portfolio to make it work properly in the conditions that might exist up there. But no, I think we're going to see it.

[Nilay Patel]

Elon's plan, recently filed for approval for this plan is to launch a million satellites, part of a constellation, obviously. He's launched constellations before. You mentioned power that's obviously solar.

[Chuck Robbins]

Yep.

[Nilay Patel]

Can't we just do solar power here on Earth? Is that not a possibility?

[Chuck Robbins]

Well, I think up there you have unlimited, unimpeded. And so it's, it's just easier. You don't have to deal with a lot of the chall that people, where people don't want these data centers in their communities or near them. So that's obviously off the table. I think it solves a lot of problems. There's a lot of challenges figuring out how to make it all happen.

[Nilay Patel]

Yeah.

[Chuck Robbins]

But given his history, I wouldn't doubt him. And we're going to prepare to, to have our technology ready.

[Nilay Patel]

What does that preparation look like for you?

[Chuck Robbins]

Well, it's a very early stages right now. Our teams came to me, literally, I think it was about two or three months ago, my head of product came and said we really have to be prepared for data centers in space. And I looked at him like he was crazy. We don't even know everything we need to do yet. But we're in the early stages of just making sure the atmospheric issues, the temperatures, I mean, all those things will have to be taken into consideration. But at some level, you don't have to. We don't have to deal with all the cooling and things of that nature, which add a lot of weight to the product because you first start thinking about how do we get them up there. And so there's, there's a lot of things that our team's thinking through right now.

[Nilay Patel]

What does that networking stack look like for you? Do you have to invent a whole bunch of new stuff? Is it the same stuff in it without as many cooling loads or with less.

[Chuck Robbins]

I think it's generally the same with, with perhaps different interfaces for different satellite technology, things like that, but shouldn't be too dissimilar.

[Nilay Patel]

Do you want to be on the, on the bleeding edge of that, or you wait and see if Elon can prove it out?

[Chuck Robbins]

No, I'd like to be on the front, the leading edge. How about we say that makes sense? Maybe not bleed, but let's lead.

[Nilay Patel]

What does that investment look like for you? Are you going to stand up a team?

[Chuck Robbins]

The teams that currently build our data centers are the logical ones to actually do this analysis. And I think that's what's, that's what's happening right now.

[Nilay Patel]

The cooling piece of it, for example, to me seems challenging in a lot of ways. Right. You have to move the heat out of the products. There's no air in space. That's not going to naturally happen. Right. There's like.

[Chuck Robbins]

You're getting way beyond me pretty quickly.

[Nilay Patel]

Yeah. I'm just curious. Like, we've written a bunch of should we put data centers in space stories now, and I was dying to ask you this question because it feels like someone has to do a lot of basic R and D work six months from now.

[Chuck Robbins]

Have my chief product officer do this with you, and he can, he can go through a lot of that with you.

[Nilay Patel]

Fair enough. Let me ask you the flip side of this. You mentioned this already. There's problems with building data centers in the United States, around the world. I want to come to that in more, in more depth. But are we just running away from the problems of politics and saying we'll just do it in space where there's no one to get in our way?

[Chuck Robbins]

I don't think that's it. I think it just eliminates a lot of the challenges that, that you're facing on, on the planet. And so let me, let me assure you, I grew up on a farm in Georgia, so the last thing I ever thought I'd be talking about are data centers in space.

[Nilay Patel]

Sure.

[Chuck Robbins]

And even five years ago, I wouldn't have been. Wouldn't have thought I'd be talking about it. But if you think about a lot of the dynamics we're dealing with. I don't think it's politics so much as it is a lot of the physical limitations, the, the community. There is an aspect where a lot of the people in the communities don't want these things in their backyards. And I get that. Sam Altman is one who says immediately, I don't think they should be in their backyards. We got enough rural areas in this country where we ought to be able to put these things.

[Nilay Patel]

Sam Altman also notably says data center space a pipe dream. So who are you going to. Does he. Who you got?

[Chuck Robbins]

Yeah, I wouldn't bet against Elon.

[Nilay Patel]

All right, fair enough. Let's talk about Cisco for a second. Cisco is. You've been CEO for 11 years. You've been there for almost 30. I want to say this is a company that goes boom and bust with boom and busts. Right. In the, in the, I think in the dot com era. Cisco is briefly the world's most valuable

[Chuck Robbins]

company for about a day, I think.

[Nilay Patel]

Yeah, yeah. And this is a company that went. And it's time to do infrastructure. Cisco can be one of the big growth drivers.

[Chuck Robbins]

Infrastructure's cool again, you know.

[Nilay Patel]

Yeah, it's time to build, as they say. What is Cisco to you right now? How would you describe this company?

[Chuck Robbins]

We securely connect everything. I mean, that's basically what we do. We connect systems, we connect people, we connect things. And we do it in a secure way. We're connecting AI data centers, we're connecting GPUs within AI data centers. It's really primarily about secure connectivity.

[Nilay Patel]

So when you connect everything, I think primarily when people have thought about that, they've thought about, honestly, last mile, like you build the big Internet, that's an enterprise problem. And then we're going to do 5G and Small World Congress, we're going to do 6G now, who knows what that's going to be? But that's the big Internet that people have long thought about. I know you have a big corporate business. The turn for networking right now feels like data centers. Right. It feels like we're building these big data centers. We're going to link up a bunch of GPUs and ways. We haven't necessarily linked up those GPUs before. We have different kinds of workloads because of AI. Is that a meaningful difference to how you conceive of Cisco?

[Chuck Robbins]

There's certainly more and faster innovation around things like our silicon that we design ourselves that is going into the data centers. So the data center, the continued evolution of the Data centers is forcing us to drive those cycles faster. And if you look at our enterprise data center business, which if you go back to 2010, when the cloud came along, or 2008 or whenever it was, there was a belief that we were never going to sell another, there was never going to be another private data center built. And if you look at the last eight quarters, I think we've had six of the eight. We've had double digit growth in our enterprise data center networking business and we had high single digits in the other two quarters. So we see that business growing at the same time that if you go back five or six years, we had relatively zero business from the big hyperscalers. And this year we'll do billions. And most of that's driven by AI infrastructure and their data centers. So I think your assumption is accurate.

[Nilay Patel]

Is that just a lack of their capacity? Right. Amazon or Microsoft wants to build out another data center for themselves and they can't do it themselves because they're building so fast, they're turning to you?

[Chuck Robbins]

No, we're selling them equipment that they're using to build their own data centers. So they're building them.

[Nilay Patel]

So what was the turn? Why did that line start growing for you when it wasn't growing before?

[Chuck Robbins]

Success in business is always a combination of good decisions and a lot of luck, I think. And so the luck struck in 2016 when one of my engineers who ran our hardware, who built our hardware came to me and said, there's this silicon company in Israel that I think we should buy. And we had. It gave us the opportunity to have to standardize on a single silicon architecture across the entire portfolio. So in 2016, we bought this company. It was called Leiba. You know, we're one of basically three companies in the world that can build a networking silicon that that's needed to connect these GPUs, run the training models, run these AI data centers. And so that was a big part of what's helped us get there. And to be candid, if we didn't have that silicon today, we would not be participating in this phase because otherwise I'd be buying merchant silicon like all my competitors, and I'd be just like everybody else. That's the biggest thing that's differentiated us in getting us to this point.

[Nilay Patel]

We have a lot of competitors or would be competitors. Come on the show and talk about networking. That seems like growing business for a class of companies. The one that I'm particularly interested in is Nvidia. You guys have a deep partnership with Nvidia they just had gtc. You know, Jensen's out there, he's pointing out that their networking business is huge. It's bigger than yours in some ways. Their last fiscal year, 31 billion. I think you guys were at 20 billion in the last quarter, it's billions bigger than yours. Is that a threat to you that Nvidia is so deep into building up the networking component? Because they're obviously selling the GPUs. Yeah, there's a place they could go, right. They can just expand their footprint. Is that competition? Is that coopetition?

[Chuck Robbins]

It's coopetition. I think in some cases, if you look at the big hyperscalers, they actually build their own integrated architecture using best of breed, whoever they want to use. And they are very good at balancing their spending across multiple vendors. They like to have optionality. They want diversity at the silicon level. That's how they think. You see some NEO clouds as an example, Nvidia sells a fully integrated stack that has networking included in it. And sometimes they'll just that that's a path of least resistance and it helps them get there faster. So sometimes they'll buy that. If you look at the enterprise, most enterprises have built 40 years of knowledge processes, everything around our platforms and our technology. So that's a big part of why Nvidia values our partnership is what we can do together in the enterprise. And the other thing we have, which no one else has, is security. And so as we move to this agentic era and you have agents operating all over your infrastructure, you have to do security in the network because the latency requirements are going to require that I'm doing full time security on these agents all the time. I'm doing access validation, identity of validation of agents. And we're the only networking company that has a big security business and none of our security competitors have a networking business. So it's a big advantage to us as we go forward.

[Nilay Patel]

Yeah, we just had the CEO of Okta on the show and his entire pitch was I will build you a kill switch for your agents.

[Chuck Robbins]

Yeah.

[Nilay Patel]

Is that something that is competition for you? Is that something that will work alongside what you're, you're planning?

[Chuck Robbins]

I actually think there's a great opportunity for us to partner with them because that kill switch might be implemented at the network layer because we may see something happening that they don't see at the upper layers. So we'll figure it out. But the teams are working on this day and night.

[Nilay Patel]

Right now the deal is getting made here on decoder you heard it here.

[Chuck Robbins]

Exactly.

[Nilay Patel]

This seems like the opportunity, right? When I say Cisco is a company that kind of grows with booms and busts. The amount of compute that everyone is describing that they need in order to deploy agents at scale across the enterprise in order to train the next generation of models. This is a vast amount of computer. You are obviously going to help build the data centers that supply a lot of that compute. The question I have is do you see the revenue on the back end of that? Right. This is a lot of growth, a lot of forward investment for them and for you. Right.

[Chuck Robbins]

We're getting the revenue now. We would not expect this build out to end anytime soon. And I think if you look at. Everybody wants to talk about comparing this to the.com era, right. And is it a bubble, is it going to bust? I'm like, well, did the dot com bubble, did it bust or did the winners emerge? The losers failed and now we have what we have, which if they hadn't been successful, we wouldn't have any. We wouldn't be talking about anything. We're talking about today. So it wasn't like it went away. You know, people lost money and. But the winners emerged. And I think you're going to see the same thing here. The difference is in a lot of cases, the companies that are spending so much money on this infrastructure view it as an existential issue for their survival. So they're going to continue to build, they're going to continue to invest and I think they've proven that over the last few years. And I think it's got. We have a long way to go. We're very early in this cycle.

[Nilay Patel]

So I have two thoughts about this that I'm eager to push you on. One, and this is I think just related to the infrastructure. A big part of the bubble there was we built a fiber network that sat dark for ages and you can say that was good or bad, but we had it. And the fiber itself was valuable even if it wasn't full of traffic yet. Is a data center valuable on the same scale, if you build a data center and there's not the consumer workload to run it 20 years from now, you can't just show up and plug into the fiber the way that you could.

[Chuck Robbins]

Yeah, I think that the difference is, is that unlike that fiber, these data centers are being used day one at full capacity.

[Nilay Patel]

Sure.

[Chuck Robbins]

And in our world the it's, it's about the networking connectivity, but it's also like optics. We haven't talked about optics, but we Made some strategic acquisitions in optics, which has also just been a big deal for us because at some point you're not going to be able to get the packets off the processor over copper because the speed's just too great. And so us having both those technologies in house are also, is also another benefit for us as we look to the future.

[Nilay Patel]

The other question about the comparison to the dot com era that I've been really thinking about is less dot com and more mobile. But if you look at the promise of the dot com era, it was we're going to take the economy and we're going to move it onto the Internet, right? Broadly you're going to buy our pet food online and like maybe you weren't going to buy it on a Dell desktop PC. It actually happened when we got to mobile, right? We just moved the economy onto the Internet. Everyone's doing E Comm and it turns out buying pet food from Amazon on a computer totally works on that computer as a phone. And then Apple and Google get to extract rent from everybody for all their purchases and games. And like, we have an economy that works that way. Promise of AI is we're going to do it again, right? We're going to move the economy a third time to a next paradigm in computing. What's the evidence you see that that is happening or will happen at the scale necessary to support this investment?

[Chuck Robbins]

Well, if you look at just some of the early agentic platforms you heard Jensen this week talking about OpenClaw, if you just look at the early promise of what that can do for you, I think you're going to see that it's going to automate a lot. It's going to make your whole purchasing process different. I just reflect back on 2007, when the iPhone came. None of us had any clue what we'd be doing with that phone today. None of us. I mean, maybe there's some people somewhere who, who are such visionaries, they saw it coming. But the application portfolio that we have today is much broader than we ever thought it would be. And I think you're going to see the same thing emerge around AI. We don't know what all is going to come. We have ideas about things that we think will happen, but we don't know everything that's going to happen. And I mean, this stuff's changing so fast. You know, I talked to Kevin at OpenAI and he, Kevin will, and he's like, we'd sit down and have meetings about what are we going to do the next two months and Then three weeks later, we throw it out and start over again. Because everything's changing so quickly. And I think that's the way we're going to all have to operate, which is going to be very uncomfortable for a lot of people.

[Nilay Patel]

Is that changing the way that you're selling your products to build this capacity? Because if you don't know what the capacity is for, it must change how it's being built.

[Chuck Robbins]

Well, it's changing a lot in how we design silicon. These customers are so big that they're a market of 1. So we have unique requirements coming from an individual company which, which we haven't had to deal with in the past. We built general purpose silicon. We sold it to everybody and it worked. So you have different applications, different use cases, different customers that are, that are leading us to have to move faster and build more variants of some of this technology than we would have in the past.

[Nilay Patel]

That's right up against the insatiable demand of other silicon providers.

[Chuck Robbins]

Right.

[Nilay Patel]

There's a capacity crunch for chips, there's a capacity crunch for ram. How is that working for you? Are you able to get the flexibility you need?

[Chuck Robbins]

When you look at fab capacity, we would, we could use more, but the world could use more. Everybody. I don't think you get anybody on here who builds chips that wouldn't say, I'd love to have more capacity. Same thing for memory. We're in a, we're in a crunch for probably 18 months, something like that. We're doing everything we can to try to secure what we, what we need. And we feel pretty good about where we are right now, but we'll see how, how the demand plays out over the next year and a half.

[Nilay Patel]

It occurs to me, just talking to people about RAM margins, I talked to consumer laptop vendors who said there might not be consumer laptops this year. Right.

[Chuck Robbins]

Like, it might just be priced out.

[Nilay Patel]

Priced out. Just to put a stick of memory in a cheap laptop. You might just never be able to cover the cost. We might just be out. I saw the CEO of Razer, which makes gaming laptops with lots of fun lights. He's like, week to week, I don't know what the margin on that product will be. You've got to build a big piece of the infrastructure puzzle. The GPU is useless without the networking. This has to equalize somewhere for you, at least right where you say, look, this is our margin to build the networking to get the value out of the GPUs that you're buying at super high rates from Nvidia. And whoever El is that working in the market to equalize at least your prices.

[Chuck Robbins]

Networking equipment uses a lot less memory than compute platforms do, obviously. So we have memory in every networking device, but it's much smaller percentage of the BOM than it would be in a.

[Nilay Patel]

That's. Bill of materials.

[Chuck Robbins]

Bill of materials. Thank you. Sorry about that. Than it would be in like a server. And yeah, the customers understand and what I keep trying to explain to them is the, the price increase are happening upstream from us. You know, we're just an absorber of the price increase and we're having to do more frequent price increases than we have and we're having to change our terms to be able to deal with the, the same thing that your, your other guests talked about, which is the dynamic nature of the pricing that we see right now in the memory space. But when you go to the large hyperscalers, I said earlier, it's existential. What we've just adopted with them is more of just a transparent model that says here's, here's what we need, here's how it works, here's our pricing. And, and they're generally like, they, they

[Nilay Patel]

understand because there are other choices, especially for what you provide.

[Chuck Robbins]

Everybody's in the same boat. It's not like you're going to go somewhere else and somebody's going to give you memory at, you know, 10% of the cost of what we're giving it to you for. I mean, everybody's just trying to, trying to deal with the capacity crunch right now.

[Nilay Patel]

We have to pause here for a quick break. We'll be right back.

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[Nilay Patel]

Welcome back. I'm talking with Cisco CEO Chuck Robbins about the big decoder questions. I think this brings me to the decoder questions because my next set of questions after this are really how you're handling this sort of interlocking set of complicated puzzle pieces. Tell me how Cisco is structured right now. How's the company? How big is the company and how it Organized? Organized?

[Chuck Robbins]

We're 85,000 people plus some contractors. But. And we're structured functionally like most companies. We've got a sales organization, we've got a product organization. The one change that I made about 18 months ago is that I consolidated all of our products under a single leader for the first time that I can remember. It's a big, complex portfolio. And so we did that. You know, we've got a services organization. It's fairly functional, pretty standard.

[Nilay Patel]

You've been reducing the size of the company pretty substantially over the past three. Three years, I would say two, three years, 20, 24. You had two big rounds of layoffs. You just had some other little layoffs.

[Chuck Robbins]

Most of the time those are rapid reallocations that we need to do. It's unfortunate, but typically the ones we've done have not been about reducing the total number of headcount. At least up till now. They have not generally been that way.

[Nilay Patel]

I was just reading some coverage of those changes. There's a lot of. Are these AI related layoffs? Is that on your mind that you might be thinking about new kinds of structures, new kinds of engineering structures?

[Chuck Robbins]

Sam and I were talking about this last week and let's say that our, our engineers become twice as productive because of coding. As an example, this year we'll have five or six products that'll be 100% written by AI. Next year we'll probably have 70% of our code that'll be written by AI. You still have to test it. You still got to go through all that stuff. But let's say you make them twice as productive. Just for simplicity of math. Then companies are going to have to decide, am I going to maintain the same pace of innovation with half the people? Or am I going to double my pace of innovation with the same number of people? And I think different companies are going to make different decisions and some variant in between. And I think that's where we're going to head. But we got to, we got to see this all come to life. I mean, we're seeing the early successes of coding, but we haven't seen the unintended downside yet that we haven't figured out. We got 20 year old code, 30 year old code that's integrated in systems, it's written in C as an example. And my head of product told me we took all these old lines of code, we compressed it to about 20% of what it was before, converted it to a modern language using AI. And my first response to him was, you better test that like crazy before you put it in a product and put it in a customer environment. So there's a lot of stuff we're still learning as we go through there.

[Nilay Patel]

Stay on that for one second. Right. Cisco code can't fail. If Cisco fails, something bad happens in an escalating catastrophic way. How do you think about that risk? Right. I mean, this is, I keep joking that I ask everybody the org chart question. I've asked it for five years and there's like two answers, like we're functional or divisional and we get through it. And now I think we're on the cusp of seeing some of the weirdest org charts in business history.

[Chuck Robbins]

Yeah. Right.

[Nilay Patel]

I manage a team of two people and 500 agents.

[Chuck Robbins]

Yeah.

[Nilay Patel]

Meta is about to do one manager to 50 individual contributors, all using agents to write code. I don't know how any of that's going to work. You can't take some of those risks. But you're describing the productivity gains that might come with some of those risks. How are you thinking about that?

[Chuck Robbins]

You're right. Our stuff, the whole mental model around our software development versus these models. Kevin Wilf from OpenAI, he made a comment at our AI summit one and he said, you guys should be using these models when they're working properly 10% of the time just to get to use them. And I sat there and I listened to that comment and it's just a different way of thinking. I mean, granted they're going to get it to full, but you just go into it recognizing that it's, it's still evolving. We don't have that luxury. Our stuff has to work. So we'll have to, we'll have to figure this out as we go. But we've seen how dependent the world is on technology functioning properly. And so we will have to just assess it as we get closer. But I think there's going to be an awful lot of testing that has to get done. But the flip side is we think we can, we think AI can help us find bugs more quickly. It can help us assess customers infrastructure to say, hey, you're running these four versions of our software. We've seen a lot of instances where when you're running those four, it's created a problem or there's cybersecurity risks in certain parts of the code that AI can help us find. I mean, there's a lot of upside. So there's a lot of opportunity for AI to help us become more, more reliable, safer.

[Nilay Patel]

You've mentioned security several times now. The flip side of we can deploy AI to help us with security is your adversaries or attackers might be able to deploy AI to attack you much more efficiently. And they are, how is that playing out for you?

[Chuck Robbins]

The emulations that you're going to see and the simulations of an email and video and people replicating me and sending it to, I mean, it's just going to get crazier. And so we have to be better at using our tools. And I have also been a big proponent of all of the security competitors in the industry sort of laying down our weapons and we still compete, but in service to our customers. I believe we have to share intelligence real time, much more effectively today to help our customers deal with this. Because any one of us on our own is going to be less effective than all of us together. And so that's a big thing we've been pushing. We, we've been building a lot of capabilities and, and there's a lot of opportunities to integrate our platforms and our threat intelligence. And if you think about what you can do with models, if you start training on threat intelligence and conditions that, you know, led up to threat vulnerabilities, there's an awful lot we can do to get ahead of this and we need to do that.

[Nilay Patel]

I think this brings me to the other decoder question that I ask everybody. This is the one that I think it's going to be under pressure for everybody. At the scale of change you're, you're describing here, how do you make decisions? What's your framework?

[Chuck Robbins]

When I actually wrote my thesis, when I was going through the process of becoming CEO and the board was assessing the candidates, one of the things I called out in the document was that, and this is 12 years ago. Okay, 11 and a half years ago I said that the industry is moving so rapidly, you're going to have to have team based strategy. You have to have a lot of people developing strategy because there's no one individual. In general, there's some brilliant minds. So I'm not ruling any human out, but that can actually come up with the exact right strategy every time they're assessing what they need to do. So we spend a lot of time together as a team. We spend anywhere from one to three hours together every Monday. We're off site together for two to three days every quarter. And the way we make decisions, look, 99% of the decisions get made below me because they're easy or, or people too smart people agree. And when they get to me or any other CEO, they're typically, you know, you're usually assessing two potential bad choices or you got two smart people who completely disagree, which tells you it's complicated. In general, we, we just spend a lot of time in transparent discussion and open communication about, about how we're going to make the decisions. At the end of the day, I'm, I own them. So. And I have this belief that, you know, when, when a decision goes really well, you give everybody else the credit and when it goes very poorly, it's all on me. And that's how you just have to operate the decisions.

[Nilay Patel]

Question, you are dealing with a vast amount of uncertainty, right? How the global Internet will be structured is a vast amount of uncertainty. What the hyperscalers need as they build out new capacity for uncertain workloads. Who knows we're going to sell a bunch of products to the neo clouds which have circular financing and those bills might not get paid, which I want to come to. That is a lot of uncertainty. Whether or not all of this infrastructure investment pays off in GDP growth, I would say is the biggest uncertainty of all. How are you dealing with that?

[Chuck Robbins]

You haven't gotten to three or four other big ones.

[Nilay Patel]

Go ahead, what are they?

[Chuck Robbins]

Well, you've got the geopolitical situation, you've got sovereignty requirements all around the world emerging you got two wars around the world, you got tariffs, you got memory costs, you got all these things we're all trying to navigate. So it's pretty complicated.

[Nilay Patel]

That is a lot of uncertainty on your decision making. You're saying it all rolls up to you. When it goes wrong, has that affected how you're making choices?

[Chuck Robbins]

You just have to move faster. We had on all hands with our entire company yesterday, we do it once a month. I told him, I said, look, if speed and change, if it makes you uncomfortable, you're going to be uncomfortable. It is a world where companies can get, get seriously damaged in a very short period of time. And this is what's driving a lot of the investments. Because there's a big FOMO issue in the C suite today. CEOs are like, what am I missing? What's my competitor going to do that I don't know about? And so I think what that leads us to is you. You know, we used to say get 80% of the information you can and then make the decision, then adjust as you go. And I think that's. Maybe it's not 80 anymore, but you're going to have to take that approach and you're going to have to be willing to take risks and you got to be comfortable being uncomfortable. And if you're not, it's going to be pretty complicated and pretty stressful time.

[Nilay Patel]

Billions of dollars of capital are being allocated for infrastructure. Does it come up that the products that might pay this off don't exist? Does it come up next to the fomo?

[Chuck Robbins]

Depends on the customer. If you look at the telcos, the cloud providers, the people whose core business is highly dependent upon products that we, I mean, everybody's is, but I mean, we will have those conversations, you know, with their CEOs and their leadership team. You go to Mobile World Congress as an example. We were just there every meeting the CEOs in from those, some of those carriers and service providers. So they care. When you get into the enterprise space, some of them are super technical. They understand the value of technology, so they want to talk about trends, they want to talk about what's what. What do we see other companies doing or what are we doing as an enterprise that they should be thinking about. But usually if there's a big, something big going on the table, my, my only positioning with them is if you go with us, you have my personal commitment that we'll throw all the resources we need to, to make a new successful. And that's usually all they want to know.

[Nilay Patel]

I feel like there's a split right now in the market. I understand the enterprise use cases for AI. I understand why you'd want to build as fast as you can there, right? Particularly software development as you described. Like, we can see the benefit. We talk to developers all the time here at the Verge. They're like, our entire jobs are different. Like the world has changed, the market is cracked open, something is going to happen there. And then you downstream of that you can see, okay, well, we hired a bunch of engineers to build us business process automation. Now maybe we get way more value out of those engineers. We get way more automation. There's something in the enterprise that's going to happen for sure that feels like I understand the value. Do you see any consumer applications of that scale beyond just, I'm going to tell the Alexa to buy me shoes and then it's going to. Because quite honestly, I don't yet. Apart from Google Search got a lot weirder in the past two years.

[Chuck Robbins]

I don't have any great examples yet. And you're right, you are seeing sort of some horizontal areas in the enterprise that are consistent across almost every company, like coding. Customer service is one that everybody's working. You start to see some emerging horizontal use cases in legal, and we see a lot of use cases in our people organization too. And I think those are pretty standard. Everybody's at least aware of those opportunities. People are at different stages on the journey. But yeah, I'm not the consumer expert by any stretch. We're pure B2B. So that's where I spend all my time.

[Nilay Patel]

I think this relates to why I started out by asking about data centers in space. And I've heard Sundar Pichai say variations of this idea. Without the big consumer application that everybody understands and sees the benefit, putting the data center in the backyard is becoming an increasingly harder sell. Right. The power requirements, the water requirements, which I know are controversial and often argue about, but just the energy resources requirements of the data centers are making the data centers unpopular. I don't think it's all that. I don't think the environmental argument historically wins in America. Like, I drive a V8 Mustang. I'm going to keep driving that car. We have an EV that's parked right next to it. But those cars are popular for reasons, right? Fast fashion, enormous environmental impact.

[Chuck Robbins]

Yep.

[Nilay Patel]

People like it.

[Chuck Robbins]

Yep.

[Nilay Patel]

There's not an AI product for consumers that they like so much that just transcends the objections they can reach for. We're seeing it play out in really weird ways, like in bipartisan ways. People are pushing back against the data centers. Are you going to be able to hit your goals if data center construction slows? And is there a way to overcome those goals without the great consumer product?

[Chuck Robbins]

I think there is. Look, we've been the most innovative country on the planet for a very long time and that's not going to change. And some of the smartest people in the world are Actually trying to solve these problems. And they will, by the way, I think if you give some of those residents the greatest AI tools on their phone that they've ever seen in their lives, they still don't want the data center in their backyard. Really. I don't think they're gonna say, oh, this is great, so I'll go ahead and drive my energy costs through the roof and I'll be okay. You know, we saw a little bit of this with 5G. They didn't want radio towers. You remember. Remember that whole thing?

[Nilay Patel]

Oh, I remember this.

[Chuck Robbins]

Is that at a much greater scale? But I think we'll figure it out.

[Nilay Patel]

The 5G comparison is really interesting. I know you just came back from Mobile World Congress where we are gonna 6G now 6G is coming. AI has the same problem. Right. You can't describe what it's for in a way that might overcome the objection. That feels like a fairly unique point for the whole industry to be at, where the next generation of technology is very exciting to a handful of providers. It's the future of your business in real ways. And the applications are harder and harder to describe. You've seen it all. I'm asking this question on that big sweep, right? We're talking about the Internet. It was easy to describe what the Internet might do for people. I actually disagree with you. I think a lot of people instantly saw what the phone would become. Right. There was. There was an excitement there. That's where you got startup founders from, like in that way that you got founders from.

[Chuck Robbins]

Yeah.

[Nilay Patel]

This one just seems more nascent to me. How would you place that in your sweep of history?

[Chuck Robbins]

We've seen some unique 5G use cases that have been like, manufacturing has been a great one, but they're very niche. Right. The most prevalent 5G use case is actually backup connectivity for branches, as an example. But you're right, we didn't have the number of use cases. And I think if you asked the CEOs of the telecoms, they would probably say that they're disappointed in the return they got on all the investment around 5G. I think robotics in general could be the. Could be the real driver of the utilization of 6G once it gets built. But again, it's early days of being defined. It's still typically. We've talked about these sort of tech transitions for years and years and years before they come to fruition. AI is different, although we did talk about it for a long time, and then all of a sudden it broke loose. But the pace at which it's changing is just unprecedented, so I think we'll have to see on 6G. It's still TBD, but I don't expect that you'll see the same mistakes made from a from a speed of investment perspective until they become more clear.

[Nilay Patel]

We're going to take another quick break. We'll be back in just a minute.

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[Nilay Patel]

It's not a battle.

[Sponsor/Announcer]

So glad the Saja Boys could take

[Chuck Robbins]

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[Sponsor/Announcer]

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No, it's.

[Chuck Robbins]

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[Sponsor/Announcer]

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[Nilay Patel]

No, really, stop.

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[Nilay Patel]

Welcome back. I'm talking with Cisco CEO Chuck Robbins about the data center needs of the AI era and whether or not consumers will buy into having all those data centers built across the country. The Internet also was hand in hand with globalization.

[Chuck Robbins]

Yep.

[Nilay Patel]

Right. We have, we both have iPhones. They're made all over the world. And you had this giant global network. Maybe this is going to lead to an age of prosperity. Maybe this is going to lead to an age of extreme labor displacement. Like, you can read that however you want. There's a lot of opinions about what the Internet, and particularly global manufacturing, globalized manufacturing, led to. That's all being undone. You can see that every single day that's being undone, whether that's tariffs in an effort to bring manufacturing back to the United States, which you talked about on the show with many of your peers, or whether it's, hey, we're going to put up big walls on the Internet, right. Australia is going to have a social media ban for teens. They got to enforce that somehow. It's probably going to happen at the network layer. You have the European Union saying the data has to be here. We have to put the data here. The European data has to be in Europe. You build the networks. I'm imagining all of this is just one more layer of complication. Even as you describe, okay, we should have global systems that bring us to an era of shared prosperity. How are you dealing with that?

[Chuck Robbins]

What you're seeing play out is not only do countries, and it's not limited to Europe at this point, not only do they want to have data sovereignty, they want to have sovereign control over any technology they're using. They don't want the US to have the ability to impede the use of that product under any conditions. As an example, some of the meeting platforms like WebEx or Zoom, et cetera, those things. They don't want any other country, and I'll say the US but any other country, to have the ability to cut off their access to use these platforms. If they were going to invest and use them for critical reasons inside their countries. In many cases they would prefer to have, let's use Europe as an example. European companies that build the technology that they use in their infrastructure, in many cases they don't have that capacity at scale. And so then they have to go default to who are the companies that I trust? And trust becomes such a big. We talk, we've, it's a big discussion obviously around AI, but it is really a big deal. And so for us, as an example, every country we operate in, we have always tried to be good citizens, good members of the community. We've had education programs where we've been training on digital skills around the world for 25 years, 30 years. Last year alone we trained over, we had 5 million learners go through one of these programs around the world. And so that trust element is going to become very important. The technology is one thing. You have to build technology that can be deployed the way they want it to be deployed. And then you have to have a very high degree of trust.

[Nilay Patel]

Is this changing how you're architecting some of your products?

[Chuck Robbins]

It is.

[Nilay Patel]

What are some specifics?

[Chuck Robbins]

Well, you know, you'd love if you have a cloud solution historically what you would do. And a lot of, lot of companies were built this way. You build global instances and you, you partition it and you sell it off to different customers. If you go to Germany, as an example in Germany says, I want to have my version of that running in my country. It's architecturally different than how you might have designed it to begin with. So we're now designing a lot of those control systems or those cloud oriented systems so that they can be structured in a way where they can run in a country alone. And, and we don't think about building global instances anymore.

[Nilay Patel]

This is like a very different way of building the Internet, right? Like, it just isn't the thing. Like my first experience with the Internet was watching the coffee pot at the University of England, right? Like this was the promise when I was like a kid watching like a one frame a minute livestream of a coffee pot being like, I can go there. And now we're like, oh, we're. This thing happens.

[Chuck Robbins]

You watch live streams of coffee pots for real.

[Nilay Patel]

Do you Remember this? Like 1994? This is like the first video feed on the Internet was a coffee pot in Cambridge.

[Chuck Robbins]

Oh yeah, yeah.

[Nilay Patel]

It blew my mind when I was a kid. This is like, in some ways it's more than ever, right? You can watch live streams of all the coffee pots and in some ways this is just closing down. Right. Every country is saying our citizens are here, we're going to manage what they do. Their lives are on the Internet. We are going to control the Internet in our country. And that's happening all over the place in all kinds of different ways. It's honestly happening state to state. Like the Internet in California looks different than the Internet in Texas today. You're the networking provider for many of these countries, for many of these companies. When you think about the sweep of what the Internet might look like, when you think about the amount of compute that's happening in a data center as opposed to happening locally on my laptop. Right. Which is always a kind of dance. What does the Internet in the next five years look like to you?

[Chuck Robbins]

Well, it's going to be more fragmented for sure. I think you are going to see lots of district, you're seeing the cloud providers build in regions in certain places and they're having to re architect to think about this. For most of the functionality that we use the Internet for today. I'm not sure it's going to change much to be honest. There are going to be controls that are going to exist, but I don't think it's going to change the core normal operating functionality of how it works today. They'll be there in the case of an issue or an emergency. Now where you store data and all those kinds of things are that, that's not the network's issue. So how that plays out is, is independent of what we would think about. But I think you get into times of crisis and that's when you might see things happen differently. If you're a certain country and you get into a conflict and you want to, you want to isolate yourself from a communications perspective so that you, you can trust that your communication is clear and then maybe that creates short term dynamics for your citizens. But I don't think on a normal day to day basis it's going to be that meaningfully different.

[Nilay Patel]

I mean we're seeing that right now. Right. India shuts off the Internet in cashware all the time. The Iranian Internet is like on and off every day. Like are those things that your customers are coming to you and saying one level up, the government wants this capability in the network, can you help us build it?

[Chuck Robbins]

They are having those conversations around primarily not wanting to have a third party or another country disintermediate their capabilities through tech by having some control lever or kill switch or something of that nature. That's, that's, that's typically what they're talking

[Nilay Patel]

about how does that play into AI of it? Right. Like now we have these workloads built on networks that you're supplying and you've got a bunch of agents doing stuff all day long and you're saying we're going to be the security provider for it. At some point, does Donald Trump get to say, turn off the agents? It's getting out of control?

[Chuck Robbins]

Well, I think you have to think about security at an agent level like you do at an employee level, but on steroids. Yeah, it's going to be 5 to 10x more security that you'll need to apply, maybe more. I'm just throwing numbers out, but I think we got, we have to figure that out as we get going. But it's certainly going to introduce an entry point for bad actors to do things that you certainly wouldn't want them to be able to do. And it's, we're learning and everybody's working on this problem simultaneously right now.

[Nilay Patel]

I feel like for most of this conversation, my assumption has been this is going to keep going, this is going to keep working and the problems will be complicated and everyone will work diligently and we'll solve them and someone will invent the consumer product and all of this will pay off. What if it doesn't? What if this bubble pops? What does that look like for you?

[Chuck Robbins]

There'll be lost misplaced capital, there'll be companies that will shut their doors and then there'll be. The winners will emerge and we'll build out at scale just like we saw the first wave. I would suspect that's what will happen. I think there's certainly going to be companies that are going to cease to exist. They're going to go away. That's what happens on any of these early things. You know, you take a risk. That's why the reward's so high. It's risk reward. And so it's just, it's the nature of these massive transitions. And this is bigger than probably it's bigger and faster than anything we've ever seen.

[Nilay Patel]

The amount of capital tied up in what you might call circular financing with some of these Neo clouds that seems dangerous to me. It seems like if I had to point it where the, where things will get shaky first, it will be, well, we did a lot of Ford investment, a lot of debt investment into Neo clouds against workloads that themselves have not yet paid off. Eventually all the way, you know, the bill comes due. Right. Or the investments don't happen. Is that a risk that's on Your mind?

[Chuck Robbins]

It is, but not, not particularly for us. We're super conservative. So we, I don't, I don't think I've heard instances where we've looked at some of the financials and have chosen not to do business with some of these folks. And I think every company's got to make their own decisions. We also have creative financing solutions that protect us, that, you know, that we can work through, but we're not, you know, we, we learned a lot in 2000.

[Nilay Patel]

So the name NeoClouds, are you in them? Are you staying away from them?

[Chuck Robbins]

No, we're in. We're in some of them, some of them want to use us. A lot of them want partnerships with us, honestly, because they want the enterprise access and they don't have a robust enterprise salesforce and they think that we can help them there. And so in many cases we work together to figure that out.

[Nilay Patel]

The other way I can see things maybe not get shaky, but change dramatically in the way that changes the sort of investment valence of the AI industry is if inference becomes more valuable than training. Right. So far all the emphasis has been we got to run these GPUs red hot to do training because the next version of the model will finally be capable enough to, I don't know, be your girlfriend. Like whatever it is that they think they're going to do, like something about training has been the point. We're going to build AGI. They don't want to say it, but they're saying it all the time. There's a chance that the models are good enough and it's actually just inference. Now we're just going to run agents and cloud code is big enough to actually meaningfully affect enterprise cost dynamics. Does that change your business? If we're done with training and actually inference is the point.

[Chuck Robbins]

No, it actually is great.

[Nilay Patel]

Yeah.

[Chuck Robbins]

I don't think you're going to be done with training, by the way. I think it's going to be additive. I think the inferencing stuff's going to be additive.

[Nilay Patel]

Do you need all the new data center build out if it's the inferencing instead of the training?

[Chuck Robbins]

Well, I mean, we would like to participate and we'd like to see that continue to grow, obviously, because it's good for our business. But, but the inferencing side, and some people believe that that's going to be bigger. A lot of enterprise customers are going to want to do the inferencing at a point of interaction with a customer and have an immediate value that they're garnering in that interaction with that customer. And that's going to be very distributed. And so distributed compute requires high performance networks, which is good for us. So we like that.

[Nilay Patel]

Yeah, I mean that's, this is what I was mentioning. The dynamics between the edge and the data center seems to always be changing. I think I saw some press releases out of Nvidia GTC about more compute coming to the edge of certain big network providers. Are you seeing that play out where we don't know where it's supposed to be? So where everyone's investing in both the edge and the data center, it's still

[Chuck Robbins]

early at the edge. I think everybody believes they're going to need it. And we're seeing certain applications where you're starting to see people pilot it. And I think this may be a good opportunity for the telecom providers. There's always been this thesis that edge compute was going to be a big benefit for them.

[Nilay Patel]

That was the thesis of 5G. I went to a, I won't say the name.

[Chuck Robbins]

It was part of it. Yeah.

[Nilay Patel]

I went to a very long dinner with one of the major telecom providers and they told me all about self driving cars powered by edge networks.

[Chuck Robbins]

You could see this become something. There's discussions now of inferencing grids and dynamic routing of, of these inferencing requests based on everything from cost of power at a given, certain given time of day to capacity that's available. I mean there's a lot of thinking about how this plays out and I think it's still tbd, but it's coming.

[Nilay Patel]

So I want to just bring this all back around. The business here is building data centers with people. Right. With big customers.

[Chuck Robbins]

It's part of it. We also connect all the employees and everything else too.

[Nilay Patel]

Sure. I mean, do you want me to talk about WebEx for another hour? Because I, I have a lot of notes about WebEx.

[Chuck Robbins]

We can talk about anything you want.

[Nilay Patel]

Apple uses WebEx. Does Tim Cook ever say, dude, can you just make the Mac client a little bit better?

[Chuck Robbins]

No, it's actually better than most others. Do you use it?

[Nilay Patel]

I mean I'm a journalist. I'm on calls with all these companies all the time. So WebEx comes up in my life.

[Chuck Robbins]

Okay, good. Well, I'm glad to hear that.

[Nilay Patel]

I think I'm just telling you, find the person in the native.

[Chuck Robbins]

I'm going to get one of my guys to get on the phone with you and make sure that we got

[Nilay Patel]

to do it on the show and we'll just go through a demo together.

[Chuck Robbins]

Okay.

[Nilay Patel]

But you got to be there, there.

[Chuck Robbins]

I got to be there.

[Nilay Patel]

Yeah.

[Sponsor/Announcer]

All right.

[Nilay Patel]

We'll live. Do not do with WebEx.

[Chuck Robbins]

I'll do that.

[Nilay Patel]

Every time an enterprise software CEO comes on the show, I'm like, do you use your product? And I would say it's a 50 50.

[Chuck Robbins]

I do all day long. You obviously do all day long. But I was also a coder early in my life, so I'm a little weird.

[Nilay Patel]

All right.

[Chuck Robbins]

I've used cloud code, so I'm, you know.

[Nilay Patel]

So you're in it.

[Chuck Robbins]

Yeah, yeah.

[Nilay Patel]

All right. But I'm saying the growth of the business, the explosive growth that everyone's seeing is, is in AI, right? It's in building these new generation data centers, this new generation of compute. The problem and I just keep circling around to it is the people don't want those data centers near them. And I have yet to see the argument for why that should happen. In my mind, the argument is great consumer products, right? Like that's. If you're like, that's where Netflix comes from, I think people will calm down. But that's not the argument we're making right now. There isn't a product like Netflix.

[Chuck Robbins]

That's where Netflix comes from.

[Nilay Patel]

I think if you put, if you're like, Netflix is building a data center in town.

[Chuck Robbins]

People like that rule, like, it's going to be faster, right?

[Nilay Patel]

Is Tom Cruise going to be there? Like something there would be right there. You would have some emotional connection to the thing that's happening. We don't have that right now. The pressure on not building these data centers is only going to go up. Right. In weird ways, I think. In Alabama, there's a state senator that proposed blocking solar build outs is a way to reduce data center interest in his state. Like, that's a weird outcome. What happens if we can't build more data centers? What happens if the public just doesn't buy in?

[Chuck Robbins]

We'll build them in space faster, I guess.

[Nilay Patel]

I mean, this is what, this is what I started saying. Are you just trying to escape the political problems of Earth?

[Chuck Robbins]

I don't think they're political problems. I think they're issues of utility and power and cooling and water and all those things. I mean, they're all interconnected. But I don't wake up every day and deal with this issue. But the people who do are very smart people. I think the thing that a consumer is going to be okay with is if, if you go in somewhere and you not only Build a data center, but somehow you increase the electric, the utility capacity of that community, or you do something positive in that community beyond streaming Netflix faster, I think that's when they'll be okay with it. I don't think their concerns are around it being unsightly or anything like that. I think the issue is the concern over the inflationary pressure that it puts on utilities and the things that they need.

[Nilay Patel]

I mean, I think one of the other. You know, in my hometown of Racine, Wisconsin, there's supposed to be a Foxconn factory, and that never came to pass. And now it's going to be a Microsoft data center. Instead of 13,000 or 15,000 jobs, which is whatever Foxconn promised to that site, there's going to be like a couple thousand. So this is a lot of water, a lot of power, and then not the economic lift that you get. And then maybe the inflationary pressures on power or other utilities as your customers are building out. Are you working with them to reduce those pressures, to find ways to make the data centers more efficient?

[Chuck Robbins]

Well, our role is really around the power consumption of the platforms that we sell them. So. And that's a massive part of our innovation cycle. Every time we want to deliver higher performance, lower, lower power consumption. And so that's. That's the role that we play in that space.

[Nilay Patel]

Well, Chuck, you've given us a lot of time. What's next for Cisco? What should we. What should we be looking out for?

[Chuck Robbins]

Look, it's hard to predict what's. What's going to happen. I mean, we were, as I said earlier, we had a high degree of luck with the optics, investments in the silicon investments that we made. We had some smart people who were suggesting that we make them, but they've turned out to be magical for us right now. I think for the next three to five years, we're going to be spending every ounce of our energy on secure connectivity in this agentic era. But, I mean, three years now, I don't know what we'll need to do because things are changing so quickly, but I think we're as prepared as we can be.

[Nilay Patel]

Well, we're going to have to have you back sooner than three years to

[Chuck Robbins]

see whatever you say. I got to come back and do webex with you, apparently.

[Nilay Patel]

Chuck, thank you so much for being on Decoder, man.

[Chuck Robbins]

Thanks, man.

[Nilay Patel]

I'd like to thank Chuck Robins for taking the time to join Decoder, and thank you for listening. I hope you enjoyed it. Like, let us know what you thought about this episode or really anything else at all. Drop us a line. You can email us at decoder@the verge.com we really do read it all the emails. Or you can hit me up directly on Threads or Blue sky. We're also on YouTube. You can watch full episodes Coderpod. It's the same handle on TikTok and Instagram Decoder Pod. Check those out. They're a lot of fun. If you like Dakota, please share it with your friends and subscribe wherever you get your podcast. Dakota is a production of the Verge and part of the Vox Podcast Network. The show is produced by Kate Cox, Nick Stat, and edited by Ursa Wright. Our editorial director is Kevin McShane. The Decoder Music is by Breakmaster Cylinder. We'll see you next time.