Cisco launches new security services unit

|About: Cisco Systems, Inc. (CSCO)|By:, SA News Editor

Cisco (CSCO) is adding a Services Security Practice to its considerable services ops, with the dual goals of supporting its security hardware and offering value-added managed services.

As rival Palo Alto Networks can vouch, demand for cloud-based security services that are tied to locally-installed hardware is growing rapidly. Meanwhile, John Chambers has set a 5-year services revenue CAGR target range of 9%-11%, well above a total revenue CAGR range of 5%-7%.

Cisco is in the midst of giving its slumping security ops a shot in the arm by acquiring intrusion prevention system (IPS) leader Sourcefire for $2.7B. Sourcefire also offers some subscription-based services to complement its hardware.

Whereas upstarts such as Sourcefire, Palo Alto, and Fortinet have been posting strong Y/Y rev. growth, Cisco's security sales were flat Y/Y in the July quarter. However, that was an improvement from the April quarter's 4% drop.