Should we put data centers in space?
Absolutely. Yes. And we will. I wouldn't bet against Elon.
The amount of capital tied up in what you might call circular financing with some of these neoclouds, that seems dangerous to me. 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?
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.
Hello and welcome to Decoder. I'm Nilay 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's somewhere between me recording this and you watching 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. 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.
It's great to be here. Thank you.
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?
Absolutely. Yes. And we will.
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.
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.
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. Can't we just do solar power here on Earth? Is that not a possibility?
Well, I think up there you have unlimited unimpeded. And so, it's just easier. You don't have to deal with a lot of the challenges 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 be prepared to have our technology ready.
What does that preparation look like for you?
Well, it's in very early stages right now. Our teams came to me literally, I think it was about 2 or 3 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.
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 without as many cooling loads or with less?
I think it's generally the same with perhaps different interfaces for different satellite technology, things like that, but shouldn't be too dissimilar.
Do you want to be on the bleeding edge of that or you wait and see if Elon can prove it out?
No, I'd like to be on the leading edge. How about we say that? Maybe not bleed, but let's lead.
What does that investment look like for you? Are you going to send up a team?
The teams that currently build our data centers are the logical ones to actually do this analysis. And I think that's what's happening right now.
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?
You're getting way beyond me pretty quickly.
Yeah. I'm just curious. We've written a bunch of 'should we put data centers in space' stories now. And I was dying to ask you these questions because it feels like someone has to do a lot of basic R&D work.
6 months from now have my chief product officer do this with you and he can go through a lot of that with you.
Fair enough. Let me ask you the flip side of this. So 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 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?
I don't think that's it. I think it just eliminates a lot of the challenges that you're facing on the planet. And so 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. And even 5 years ago, I 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 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.
Sam Altman also notably says data centers in space is a pipe dream. So who you got?
Yeah. I wouldn't bet against Elon.
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 dot-com era, Cisco is briefly the world's most valuable company.
For about a day I think. Yeah.
Yeah. I mean this is a company that when it's time to do infrastructure, Cisco can be one of the big growth drivers.
Infrastructure is cool again, you know.
Yeah. It's time to build as they say. What is Cisco to you right now? How would you describe this company?
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.
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 it's Mobile 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. There's, 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 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?
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 6 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 in their data centers. So I think your assumption is accurate.
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.
No, we're selling them equipment that they're using to build their own data centers. So, they're building them.
So, what was the turn? Why did that line start growing for you when it wasn't growing before?
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 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 Leaba. You know, we're one of basically three companies in the world that can build the networking silicon 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.
We have a lot of competitors or would-be competitors come on the show and talk about networking that seems like a 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? There's a place they can go, right? They can just expand their footprint. Is that competition? Is that co-opetition? How's that?
It's co-opetition. 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 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 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.
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.' Is that something that is competition for you? Is that something that will work alongside what you're planning?
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 right now.
The deal is getting made here in Dakota. You heard it here. Exactly. 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? Right? This is a lot of growth, a lot of forward investment for them and for you, right? I mean...
We're getting the revenue now. We would not expect this buildout 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. You know, 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 we have a long way to go. We're very early in this cycle.
So I have two thoughts about this and 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.
Yeah. I think that the difference is that unlike that fiber, these data centers are being used day one at full capacity. Sure. 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 speed's just too great. And so us having both those technologies in house is also another benefit for us as we look to the future.
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-commerce and it turns out buying pet food from Amazon on a computer totally works when that computer is 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. The 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?
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'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.
Is that changing the way that you're selling your products to build this capacity? Because if we don't know what the capacity is for, it must change how it's being built.
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.
That's right up against the insatiable demand of other silicon providers. Right? 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?
When you look at fab capacity, 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 crunch for probably 18 months. Something like that. We're doing everything we can to try to secure what we need and we feel pretty good about where we are right now, but we'll see how the demand plays out over the next year and a half.
It occurs to me just talking to people about RAM margins. I talked to consumer laptop vendors who say there might not be consumer laptops this year, right? Like it might just be 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 talked to 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 project 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 else.' Is that working in the market to equalize at least your prices?
Networking equipment uses a lot less memory than compute platforms do obviously. So we have memory in every networking device but it's a much smaller percentage of the bill of materials than it would be in a server. And yeah, the customers understand and what I keep trying to explain to them is the price increases 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 deal with the same thing that 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 what we need, here's how it works, here's our pricing and they're generally like, they understand.
Because there are other choices especially for you provide...
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 10% of the cost of what we're giving it to you for. I mean everybody's just trying to deal with the capacity crunch right now.
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 work? How big is the company and how's it organized?
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.
You've been reducing the size of the company pretty substantially over the past three years I would say. 2024 you had two big rounds of layoffs you just had some other little layoffs.
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.
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?
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-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.
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. Right. I manage a team of two people and 500 agents. Meta is about to do one manager to 50 individual contributors all using agent-strike 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?
You're right. Our stuff, the whole mental model around our software development versus these models. Kevin Will from OpenAI said he made a comment at our AI summit 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 cyber security 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.
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.
How is that playing out for you?
The emulations that you're going to see and the simulations of in 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'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 and we need to do that.
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 describing here. How do you make decisions? What's your framework?
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 1 to 3 hours together every Monday. We are offsite together for 2 to 3 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. So, and I have this belief that, you know, 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 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 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?
You haven't gotten to three or four other big ones.
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.
That is a lot of uncertainty on your decision-making. You're saying it all rolls up to you when it goes wrong. How has that affected how you're making choices?
