While the supply chain issues that dogged most of the networking vendors over the past couple years have dwindled, Cisco now says the challenge is a backlog of purchased, uninstalled gear waiting on the loading docks of large enterprise and service providers.
“After three quarters of exceptionally strong product delivery, our customers are now focused on installing and implementing these unprecedented levels of products. The bottleneck that we previously saw in the supply chain has now shifted downstream to implementation by our customers and partners,” Cisco CEO Chuck Robbins told analysts on its 1Q financial call this week.
Robbins cited and example of a large enterprise who may be doing an infrastructure refresh or rolling out branch office who have ordered and received 400-500 switches but they are awaiting installation or a partner may be backed up with resources to try to get the staging done prior to installation.
“The bottleneck from our level down to our customers level — simply put, customers are now taking time to onboard and deploy these heightened product deliveries,” Robbins said. “We estimate one to two quarters worth of shipped orders and customers hands still waiting to be deployed.”
The result is less orders, until this backlog is installed, and an impact on company revenues, Robbins said. “We believe this implementation phase is the primary reason for the slowdown in new orders.”