Cisco CEO Chuck Robbins Wants Data Centers in Space  🔗 **Source:** [Cisco CEO Chuck Robbins Wants Data Centers in Space](https://share.snipd.com/episode/9712bc88-2ce7-4ea7-b82c-e4db319ebf04) ## Highlights - **Chuck Robbins Thinks Data Centers In Space Are Inevitable** - Chuck Robbins says space data centers are real because orbital solar power and fewer local siting fights remove major Earth constraints. - Cisco already started early portfolio work on temperature, atmosphere, interfaces, and launch weight tradeoffs. Transcript: Nilay Patel 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 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 Elon. Yeah. And 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. Yep. 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. Sure. And so it's just easier. You don't have to deal with a lot of the challenges 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. But given his history, I wouldn't doubt him. And we're going to prepare 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, 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 a lot of things that our team's thinking through right now. ([Time 0:05:12](https://share.snipd.com/snip/c59ffd19-4cac-46ef-8e53-b4abced7220e)) - **Cisco's AI Position Started With A 2016 Chip Bet** - Cisco's AI networking surge came from owning custom silicon, not just selling more boxes into hyperscaler demand. - Robbins says buying Israeli chip company Leaba in 2016 made Cisco one of three firms able to build the networking silicon AI clusters need. Transcript: Nilay Patel It feels like we're building these big data centers. We're going to link up a bunch of GPUs in 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 that 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 built our hardware came to me and said, there's this silicon company in Israel that I think we should buy. And it gave us the opportunity to standardize on a single silicon architecture across the entire portfolio. So in 2016, we bought this company, it was called Liba. 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. ([Time 0:10:24](https://share.snipd.com/snip/ce122551-31e1-45bd-8e15-18c1f9d6ab7b)) - **Cisco Sees Nvidia As Coopetition Not Pure Threat** - Robbins frames Nvidia as both rival and partner because hyperscalers want vendor diversity while enterprises still run on Cisco's installed base. - He argues Cisco's unique edge is combining networking with security as agents require real-time identity and access checks inside the network. Transcript: Nilay Patel You guys have a deep partnership with NVIDIA. They just had GTC. 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 could 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. NeoClouds, as an example, NVIDIA sells a fully integrated stack that has networking included in it. And sometimes they'll just, 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 You know, 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. Yeah. Is that something that is competition for you? Is that something that will work alongside what 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. ([Time 0:12:59](https://share.snipd.com/snip/aa361426-184d-4320-86f5-2b5459c69c53)) - **AI Looks Like A Bubble But Winners Will Endure** - Robbins says AI is bubble-like, but the important question is which companies survive rather than whether the whole category disappears. - Unlike dark fiber, today's AI data centers launch at full utilization on day one, so overbuild risk looks different. Transcript: 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 compute. 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? This is a lot of growth, a lot of forward investment for them and for you, right? Chuck Robbins I mean, 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 dot-com era, right? And is it a bubble? Is it going to bust? I'm like, well, did the dot-com – 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 be talking about anything we're talking about today. So it wasn't like it went away. People lost money, 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, 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. And in our world, 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 speech is too great. And so us having both those technologies in-house is also another benefit for us as we look to the future. ([Time 0:15:23](https://share.snipd.com/snip/a252c700-fc34-4ad1-8fde-167785d5dfad)) - **AI Demand Is Unclear So Cisco Builds For Variants** - Robbins believes AI's real demand will come from applications nobody can fully predict yet, much like smartphones after 2007. - That uncertainty already changes Cisco's chip design because giant customers now act like markets of one with custom requirements. Transcript: Nilay Patel 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 out. 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 were 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 one. So we have unique requirements coming from an individual company, 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 leading us to have to move faster and build more variants of some of this technology than we would Have in the past. ([Time 0:18:30](https://share.snipd.com/snip/9a6a8031-9875-403b-89e1-612c3b19472e)) - **AI Coding Forces A Headcount Versus Speed Choice** - Robbins says AI coding could double engineer productivity, forcing companies to choose between fewer people or much faster product output. - Cisco expects several products fully written by AI this year and about 70% of code AI-written next year, but only after heavy testing. Transcript: Nilay Patel 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? Chuck Robbins Yeah. Nilay Patel 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 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 here. 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 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 code, 30-year 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. ([Time 0:28:33](https://share.snipd.com/snip/e8067085-41d1-430a-bee5-b502f30970b6)) - **Critical Infrastructure Changes How Cisco Uses AI** - Cisco cannot accept the failure rates tolerated by frontier AI labs because its software underpins critical infrastructure. - Robbins also says defenders must share threat intelligence across competitors since attackers already use AI for deepfakes, phishing, and faster exploitation. Transcript: 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? 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. I manage a team of two people and 500 agents. 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 Will 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 still evolving. We don't have that luxury. Our stuff has to work. So 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'll 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 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 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. Chuck Robbins And they are. Nilay Patel 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 somebody, 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. 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've been building a lot of capabilities, 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 led up to threat vulnerabilities, there's an awful lot we can do to Get ahead of this. ([Time 0:30:11](https://share.snipd.com/snip/abcff169-224d-4c36-a6d0-cfe970d9b097)) - **Move Faster Than Certainty Allows** - Make decisions with incomplete information and adjust fast because waiting for certainty is too slow in volatile markets. - Robbins says Cisco now relies on team-based strategy, weekly executive sessions, and comfort with being uncomfortable as uncertainty stacks up. Transcript: Nilay Patel Think this brings me into the other decoder question 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 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 offsite 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 two 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 just spend a lot of time in transparent discussion and open communication about how we're going to make the decisions. At the end of the day, I own them. And I have this belief that when a decision goes really well, you give everybody else a credit. And when it goes very poorly, it's all on me. And that's how you just have to operate. Nilay Patel The decisions 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 is they build out new capacity for uncertain workloads. Who knows? We're going to sell a bunch of products to the neoclouds, 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 even gotten to three or four other big ones. Go ahead. What are they? Well, you've got the geopolitical situation. You've got sovereignty requirements all around the world emerging. You've got two wars around the world. You've got tariffs. You've got memory costs. You've got all these things that 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 an all-hands with our entire company yesterday. We do it once a month. I told them, I said, look, if speed and change, if that makes you uncomfortable, you're going to be uncomfortable. It is a world where companies can 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 know, we used to say, get 80% of the information you can, 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. ([Time 0:33:22](https://share.snipd.com/snip/78ff6785-b0b8-4ca9-9f6c-47c749e6e32b)) - **Great AI Products Won't Solve Data Center Opposition** - Robbins does not think a killer AI app would erase public resistance to nearby data centers. - He compares the backlash to 5G tower fights, but says data centers trigger much larger worries around electricity and community burden. Transcript: Nilay Patel 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. Yeah. The power requirements the water requirements which i 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 i don't think the environmental argument historically wins in america like i drive a v8 mustang i'm gonna keep driving that car like We have an ev that's parked right next to it but those cars are popular for reasons, right? Fast fashion, enormous environmental impact. People like it. 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. 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. Nilay Patel Really? Chuck Robbins I don't think they're going to 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 that whole thing? Oh, I remember. This is that at a much greater scale. But I think we'll figure it out. ([Time 0:39:23](https://share.snipd.com/snip/05867224-b9f6-4bb9-9197-3bcb168164ea)) - **Sovereignty Is Forcing Cisco To Rebuild Cloud Architecture** - The internet is fragmenting as countries demand data sovereignty and control over the foreign technology they depend on. - Robbins says Cisco now designs cloud and control systems to run standalone inside individual countries instead of global shared instances. Transcript: Nilay Patel The internet also was hand in hand with globalization. We both have iPhones that are 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 we 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. That's probably going to happen in 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 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 U.S. 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 U.S., 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 companies were built this way, you build global instances and 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 we don't think about building global instances anymore. ([Time 0:45:15](https://share.snipd.com/snip/cea8742a-8fcf-4722-b9c3-e8d28f7fca75)) - **The Internet May Fragment Without Feeling Totally Broken** - Robbins expects a more fragmented internet, but thinks daily user experience may stay mostly familiar outside crises. - Governments mainly ask how to avoid foreign kill switches or outside control over critical communications and AI systems. Transcript: Nilay Patel 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, 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, that's not the network's issue. So how that plays out is independent of what we would think about. But I think you get in 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 isolate yourself from a communications perspective so that you can trust that your communication is clear, then Maybe that creates short-term dynamics for your citizens. But I don't think on a normal day-to 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 Kashmir all the time. The Iranian internet is like on and off every day. Are those things that your customers are coming to you and saying, one level up, the government wants this capability of 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 typically what they're talking about. Nilay Patel How does that play into AI a bit, 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. It's going to be five to 10x more security that you'll need to apply. Maybe more. I'm just throwing numbers out. But I think we have to figure that out as we get going. ([Time 0:49:24](https://share.snipd.com/snip/2ed0a2a8-1b66-4995-aea8-66760d762de2)) - **Cisco Is Guarding Against A Neocloud Shakeout** - If the AI bubble pops, Robbins expects misplaced capital, company failures, and then a smaller set of winners building the lasting stack. - Cisco says it learned from 2000, stays conservative with neocloud risk, and sometimes declines customers after reviewing their financials. Transcript: 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'll shut their doors. And then there'll be, the winners will emerge and we'll build out a 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 take a risk. That's why the reward's so high. It's risk-reward. And so it's just 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 neoclouds, that seems dangerous to me. It seems like if I had to point it where things will get shaky first, it will be, well, we did a lot of forward investment, a lot of debt investment into neoclouds 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 particularly for us. We're super conservative. So we, 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 learned a lot in 2000. So. Nilay Patel The name Neoclouds, are you in them? Are you staying away from them? Chuck Robbins No, 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 sales force, and they think that we can help them there. ([Time 0:51:57](https://share.snipd.com/snip/269b5aeb-efa8-4b5d-819d-3f15fabe02aa)) - **Inference At The Edge Could Still Be Great For Cisco** - Cisco benefits whether AI spending centers on training clusters or shifts toward inference at the edge. - Robbins says distributed inference near customer interactions needs high-performance networking, and telecom edge compute could finally find a real use case. Transcript: Nilay Patel The sort of investment valence of the AI industry, is if inference becomes more valuable than training. So far, all the emphasis has been, we've 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. Whatever it is that they think they're going to do. 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 effectively 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. Yeah. 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 is 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 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. This is what I was mentioning. The dynamic between the edge and the data center seems to always be changing. I think I saw some press releases out of NVIDIA's 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 everyone's investing in both the edge and the data center? Chuck Robbins It's still 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 won't say the name. It was part of it, yeah. 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. You know, there's discussions now of inferencing grids and dynamic routing of these inferencing requests based on everything from cost of power at a given time of day to capacity that's Available. ([Time 0:54:04](https://share.snipd.com/snip/49653898-a536-438a-b23e-8d49f717fbab)) - **Data Centers Need Community Benefits Not Just Faster Apps** - Robbins says communities may accept data centers only if builders improve local utility capacity or deliver tangible civic benefits. - He argues opposition is less about ugly buildings than fears of higher power prices, water strain, and too few jobs. Transcript: Nilay Patel 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? 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. That's where Netflix comes from. I think if you're like, Netflix is building a data center in town, people are like, that rules. Chuck Robbins Yeah, it's going to be faster. Nilay Patel Right. 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 center that proposed blocking solar buildouts as 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? We'll build them in space faster, I guess. I mean, this is why 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 you go in somewhere and you not only build a data center, but somehow you increase 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 – in my hometown, I've ever seen 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. And that's a massive part of our innovation cycle. Every time we want to deliver higher performance, lower power consumption. ([Time 0:57:41](https://share.snipd.com/snip/3bcc50ff-3651-42d5-8de2-2825e44d67b1))