Arista Networks recently caught Jim Cramer's eye as a technology play—mainly, he's wondering if the maker of technology switches can break through the Cisco dominated infrastructure game. Or, can the two coexist?
Arista first went public in June at $43, and spiked 28 percent on its first day of trading. The company has continued to stay on fire, when it announced in the last quarter that revenues were up 53 percent, year over year.
Cramer thinks that Arista posted impressive numbers, considering that it makes hardware used in data centers and the cloud. Additionally, the company has developed a cloud-based software platform that is integrated into its switches.
However, the honeymoon came to an end Friday when Cisco sued Arista for patent and copyright infringement. It looks like they could be going for an injunction to potentially disrupt Arista from shipping any products.
Cisco CEO John Chambers joined CNBC's "Closing Bell" on Thursday and made the following comment regarding the lawsuit:
"We are not a litigious company … We welcome competition, we love it. This is about momentum on the market; we are gaining momentum versus new players and we are taking market share very rapidly and also increasing our gross margins," Chambers said. "We needed to send a message to the market that we will protect our innovation and also protect our customers."
To get further insight on the ability for the two companies to exist in the same market, Cramer sat down with Arista CEO Jayshree Ullal, who is also a former employee of Cisco.
"We were definitely blindsided and disappointed. John should have at least picked up the phone and called me. Instead it was in the press, and we only got it five days later. It is true that Cisco rarely sues, and it is also true that Arista is a rare competitor," she said.
The CEO said that the market is large enough to accommodate both companies. Ullal added that customers will continue to need traditional enterprise technology and also the cloud based technology that Arista provides.
"We absolutely can coexist," Ullal said. "No one company can get 100 percent share, and Cisco's market share has been going from 80 to 70, and Arista's has been going from zero to 8."
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In the spirit of the holiday season, Ullal noted a benefit that Arista has to offer for Christmas trees. Traditionally, when one light goes out, the whole strand will go out. However, with Arista's cloud based technology only one light would go out. They would be able to detect the outage and repair it from their cloud-based foundation.
"Everybody wants to Cloudify," she added.
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