Editor’s note: Cisco (Nasdaq: CSCO) delivered a strong quarter in the fourth quarter of 2014 by achieving balanced growth across both mature and emerging segments, says Scott Dennehy of Technology Business Research. Cisco operates one of its largest corporate campuses in Research Triangle Park, N.C. Cisco reported its latest financials on Wednesday.

HAMPTON, N.H. – Year-to-year growth in the vast majority of the company’s product lines, customer segments and geographies, albeit compared to a very weak 4Q13, enabled Cisco to achieve overall revenue growth for the second straight quarter in 4Q14, an increase of 7% year-to-year. The company also benefitted from improved spending from service providers and in emerging markets, with total product orders down just 1% and up 1% year-to-year, respectively, compared to year-to-year declines of 10% and 6% in 3Q14.

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While demand from service providers and in emerging markets will be unpredictable for the next several quarters,

TBR expects Cisco to generate an overall revenue increase in the low-mid single digits in 1Q15, driven by growth in mature segments such as Switching, NGN Routing, and Services as well as continued momentum in emerging segments such as Security, Wireless, and Data Center.

Cisco’s Data Center revenue grew 39.8% year-to-year, indicating the company has not been negatively impacted by its October decision to reduce its ownership stake in VCE. In fact, TBR believes strong demand for converged systems from Cisco’s partnerships with EMC (VCE, VSPEX) and NetApp (FlexPod) was a primary driver behind the segment’s strong performance in 4Q14. The company also likely got a boost from sales of its refreshed UCS product line, announced in September.

Cisco is successfully driving adoption of Application Centric Infrastructure (ACI), but commodity switching is an evolving threat

Cisco’s switching revenue growth of 10.5% year-to-year in 4Q14 was bolstered by customer adoption of ACI, specifically the Nexus 9000 hardware platform and Application Policy Infrastructure Controller (APIC) software. Cisco’s customer base for the Nexus 9000 reached 1,700 in 4Q14, up 75% from the previous quarter. The company has focused primarily on upgrading its install base of legacy switching platforms, e.g., the Catalyst 6500, to the Nexus 9000, stating in December that by the end of 2015 all of Cisco’s 6500 data center customers will have deployed at least one Nexus 9000 platform. In addition, Cisco is driving demand for the Nexus 9000 by providing native software functionality which enables customers to unlock some of the automation and programmability features of the platform without having to upgrade to the more expensive APIC.

What remains to be seen is how Cisco responds to growing demand for “white box” switching, particularly in hyperscale data centers as telecom and cloud providers look to commodity hardware as a viable alternative to more expensive solutions from traditional brand name vendors. Rival vendor Juniper announced its first white box switch in December, and TBR believes other major network hardware OEMs, such as HP, will look closely at launching similar products in the near future. However, Cisco is unlikely to follow suit, at least for the foreseeable future. Instead, the company will focus on delivering complete network architectures that encompass multiple product lines, attempting to convince customers that an end-to-end Cisco solution is more valuable than less expensive but disparate point products through tighter integration, simplified management, and lower total cost of ownership.