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Founded in 1984NASDAQ: CSCO Q1 FY'13 Revenue: $11.9 billionQ1 FY'13 Employee Count: 72,360
At Cisco (NASDAQ: CSCO) customers come first and an integral part of our DNA is creating long-lasting customer partnerships and working with them to identify their needs and provide solutions that support their success.
The concept of solutions being driven to address specific customer challenges has been with Cisco since its inception. Husband and wife Len Bosack and Sandy Lerner, both working for Stanford University, wanted to email each other from their respective offices located in different buildings but were unable to due to technological shortcomings. A technology had to be invented to deal with disparate local area protocols; and as a result of solving their challenge - the multi-protocol router was born.
Since then Cisco has shaped the future of the Internet by creating unprecedented value and opportunity for our customers, employees, investors and ecosystem partners and has become the worldwide leader in networking - transforming how people connect, communicate and collaborate.
Vision : “Change the way the world works, lives, plays, and learns”
Strategy : Solve our customers’ most important business challenges by delivering intelligent networks and technology architectures built on integrated products, services, and software platforms
Q1 FY13 Revenue by Geography :
Diverse and Global : 165+ Countries / 470+ Offices Nearly 70,000 / Employee
Region :
Americas : Canada LATAM, USA
APAC / GC / J : Australia, Sri LankaBangladesh ThailandCambodia Vietnam
IndiaIndonesia
KoreaLaos
MalaysiaNew ZealandPhilippinesSingapore
Greater China / Japan
EMEA :
Central EuropeEmerging
North EuropeSouth EuropeUK & Ireland
Breadth and Depth of Technology Portfolio
With 34,000 employees, Cisco Systems was the world's largest manufacturer of routers and switches in the early 2000s. Both form an integral part of the networking technology used to connect users to the Internet. Roughly 80 percent of the firm's revenues stem from transactions completed on Cisco's Web site, which is considered to be one of the most successful business-to-business sites in the world. Although sales in 2001 grew 17.8 percent to $22.2 billion, Cisco posted a loss of more than $1 billion. Management blamed this on a steep drop in orders—fueled by cuts in spending, particularly in the telecommunications sector—which left the firm with high levels of inventory.
Read more: Cisco Systems Inc - Early History, Growth Via Acquisition, Conducting Business Via The Internet - World, Billion, Percent, and Firm http://ecommerce.hostip.info/pages/216/Cisco-Systems-Inc.html#ixzz2KSzauD96
Cisco Systems Inc - Early History
Two Stanford University computer scientists—Leonard Bosack and Sandra Lerner—established Cisco Systems in December of 1984. The new company began marketing the internetworking technology Bosack had developed while at Stanford to universities, research centers, and government agencies. The following year, Stanford asked Cisco for $11 million in licensing fees, arguing that Stanford held rights to Bosack's technology since it had been developed at the University. Stanford accepted a settlement of $150,000 and free products and support services in 1986. That year, Cisco became one of the first networking technology firms to develop a router, a device linking a number of local area networks (LANs), compatible with Transmission Control Protocol/Internet Protocol (TCP/IP).
Sales reached $1.5 million in 1987, and Cisco began marketing its networking products to businesses with offices in a wide range of locations. To fund future growth, Cisco conducted its initial public offering (IPO) in 1990. Sales that year grew to $70 million and more than doubled in 1991 to $183 million. Pacific Bell began purchasing the bulk of its routers from Cisco in 1992. New product developments that year included integrated services digital routers, as well as upgrades to fiber distributed data interface (FDDI) and token ring technologies. International expansion was
launched via an original equipment manufacturer (OEM) agreement with British Telecom, and Cisco also started to market its routers to U.S. long-distance providers. After revenues surged to $340 million, Forbes ranked Cisco number two on its list of the fastest growing companies in the United States.
When the development of asynchronous transfer mode (ATM) technologies threatened to render router technology obsolete in 1993, Cisco developed routers that could assist ATM transmissions. International expansion continued with the establishment of Cisco Systems HK Ltd. in Hong Kong and new units in Europe, Japan, and Australia. AT&T Corp. and Strata-Com agreed to work with Cisco to foster compatibility among rival protocols.
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Cisco Systems Inc - Early History
Cisco launched an acquisition spree in 1993, paying $100 million for Crescendo Communications, creator of copper distributed data interface technology. Setting the stage for how future acquisitions would be integrated into existing operations, Cisco retained Crescendo head Mario Mazzola and all of his employees. Eventually, Crescendo served as the foundation for a unit of Cisco that brought in roughly one-third of total revenues. Success with this purchase prompted Cisco to continue paying for companies with products and services in high growth areas, rather than spending money on research and development to create its own products. In essence, Cisco started looking for a startup to purchase any time management determined that a rival had gotten a considerable jump start in an area the firm wanted to pursue.
Cisco paid $91 million for LAN technology developer Newport Systems Solutions in 1994. In October, the firm beat out IBM Corp. with a $204 million bid for Ethernet switch maker Kalpana Inc. When Kalpana executive Mimi Gigoux criticized Cisco's integration efforts, the firm appointed her an integration specialist. She eventually headed up a team of 11 employees dedicated to making the integration process for Cisco's many acquisitions as smooth as possible. Eventually, Kalpana's team was responsible for reducing the turnover rate of employees gained via takeovers to roughly two percent, compared to an average rate throughout the networking industry of 20 percent.
Also in 1994, the firm released its newest networking technology, dubbed CiscoFusion, which eventually included an ATM interface processor and Catalyst FDDI-to-Ethernet LAN switching technologies. By then, Cisco held a 57-percent share of the worldwide multiple protocol networking market, and its routers had started being used to power the Internet. Sales exceeded $1 billion for the first time. Although shareholders protested a proposed $348 million takeover of Ethernet switch maker Grand Junction Networks Inc., and expressed their support of internal research and development rather than continued purchases, Cisco continued to seek growth via acquisitions. It completed the takeover of Grand Junction networks the following year. In fact, it was these aggressive acquisition tactics that were later credited for Cisco's astronomical growth well into the late 1990s.
U.S. Robotics and Cisco inked a technology sharing alliance in 1995. By the following year, Cisco's routers were considered an integral part of the Internet. Making its largest purchase to date, Cisco paid roughly $4 billion for Stratacom Inc. in 1996. The firm also paid $100 million for Nashoba Networks, a maker of token-ring network hubs; $79 million for NetSys Technology Inc., a networking technology vendor; and $220 million for Granite Systems, a manufacturer of gigabit Ethernet technologies. As a result, Cisco ended up owning plants manufacturing three rival Ethernet switching systems. Although Cisco's Internet-related activities thrived, the anticipated threat of emerging low-cost routers prompted the firm to continue its efforts to grow via acquisition.
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Cisco Systems Inc - Conducting Business Via The Internet
Read more: Cisco Systems Inc - Conducting Business Via The Internet - Billion, Percent, Firm, and Market http://ecommerce.hostip.info/pages/215/Cisco-Systems-Inc-CONDUCTING-BUSINESS-VIA-INTERNET.html#ixzz2KT0F7PwS
The 1997 purchases of Ardent Communications Corp. and Global Internet Software Group elevated Cisco to the number one spot among worldwide
networking equipment makers, with an 80-percent share of the Internet router market. That year, the firm sold nearly $1 billion worth of networking equipment via its Web site, one of the earliest business-to-business sites to prove successful. By 1998, Internet sales accounted for more than 40 percent of Cisco's $3.6 billion in annual revenues, which grew 44 percent from the previous year (earnings jumped 55 percent over the same time period). According to a March 1998 article in InternetWeek, Cisco's Web site went well beyond simply allowing clients to place orders and make payments. It explained: "The site provides online documentation, order updates, design tools and help-desk support. Cisco delivers the tools to cut the time required for negotiating contracts, determining pricing, calculating lead times, checking on status and verifying shipment dates." In December, the firm established its Internet Business Solutions Group after clients began asking Cisco for helping with setting up their own Internet-based business ventures.
Also in 1998, Cisco attained a market capitalization of $100 billion, setting a record for reaching that milestone less than nine years after completing an IPO. Microsoft Corp., which had set the previous record, took 11 years to reach the $100 billion mark. Acquisitions that year included American Internet Corp., Pipelinks Inc., Clarity Wireless Corp., and NetSpeed Inc., a converter of traditional phone lines into digital subscriber lines (DSL). Qwest Communications International Inc. joined forces with Cisco in 1999 to create one of the largest Internet-based networks in the United States. In doing so, roughly 80 percent of Quest's transmissions began using Cisco lines.
With a 50-percent share of the $21 billion networking devices industry, Cisco boasted sales and earnings far above those of competitors 3Com Corp., Bay Networks, and Cabletron. Looking for new growth areas, the firm decided to diversify into the $250 billion telephone equipment industry and compete with the likes of Lucent Technologies Inc. and Nortel Networks. The first step in this strategy called for the acquisition of three fiber-optics developers. In August of 1999, Cisco bought Monterey Networks Inc. for $500 million in stock, gaining access to the high-speed optical internetworking technology Monterey used to process traffic at a network hub. Three months later, Cisco superceded its $4 billion Stratacom purchase with the $7 billion acquisition of Cerent Corp., a manufacturer of fiber-optic network equipment serving metropolitan areas. In December, Cisco paid $2 billion for the optical systems unit of Italy's Pirelli SpA. Cisco hoped to use Pirelli's dense wave division multiplexing (DWDM) technology to transmit data between network hubs and end users in metropolitan areas.
Read more: Cisco Systems Inc - Conducting Business Via The Internet - Billion, Percent, Firm, and Market http://ecommerce.hostip.info/pages/215/Cisco-Systems-Inc-CONDUCTING-BUSINESS-VIA-INTERNET.html#ixzz2KT1MJj00
Acquisition date
Company Business Country Value (USD) References
September 24, 1993
Crescendo Communications
LAN switching United
States$94,500,000 [2][3]
July 12, 1994Newport Systems Solutions
Routers United
States$95,000,000 [4][5][6]
October 24, 1994
Kalpana LAN switching United
States$204,000,000 [7][8]
December 8, 1994
LightStream LAN switching United
States$120,000,000 [9][10]
August 10, 1995
Combinet Remote desktop software United
States$114,200,000 [11][12]
September 6, 1995
Internet Junction Gateway United
States$5,500,000 [13][14]
October 27, 1995
Network Translation Firewalls United
States$30,000,000 [15][16]
November 6, 1995
Grand Junction Networks
LAN switching United
States— [17][18]
January 23, 1996
TGV Software Internet software company United
States$115,000,000 [19][20]
April 22, 1996 StrataCom ATM switching United
States$4,000,000,000 [21][22]
July 22, 1996 Telebit Modems United
States$200,000,000 [23][24]
August 6, 1996
Nashoba Networks LAN switching United
States$100,000,000 [25][26]
September 3, 1996
Granite Systems Computer networking United
States$220,000,000 [27][28]
October 14, 1996
Netsys Technologies Network simulation United
States$79,000,000 [29][30]
December 1996
Metaplex Computer networking United
States— [31]
March 26, 1997
Telesend Broadband Internet access United
States— [32][33]
June 9, 1997 Skystone SystemsSynchronous optical networking
Canada $89,100,000 [34][35]
June 24, 1997Global Internet Software Group
Firewall United
States$40,250,000 [36]
June 24, 1997Ardent Communications
Broadband Internet access United
States$156,000,000 [37]
September 2, 1997
Integrated Network Digital subscriber line United
States— [38]
December 22, 1997
LightSpeed International
Voice over Internet Protocol
United States
$160,000,000 [39]
February 18, 1998
WheelGroup Computer security United
States$124,000,000 [40][41]
March 10, 1998
NetSpeed Broadband Internet access United
States$236,000,000 [42]
March 11, 1998
Precept Software Internet television United
States$84,000,000 [43]
May 4, 1998 CLASS Data Systems Computer networking United
States$50,000,000 [44]
July 28, 1998 Summa Four LAN switching United
States$116,000,000 [45]
August 21, 1998
American Internet Computer networking United
States$56,000,000 [46]
September 15, 1998
Clarity Wireless Wireless networking United
States$157,000,000 [47]
October 14, 1998
Selsius SystemsVoice over Internet Protocol
United States
$145,000,000 [48]
December 2, 1998
PipelinksSynchronous optical networking
United States
$126,000,000 [49]
April 8, 1999 Fibex Systems Digital loop carrier United
States$250,000,000 [50][51]
April 8, 1999 Sentient NetworksVoice over Internet Protocol
United States
$195,000,000 [50]
April 13, 1999GeoTel Communications
Voice over Internet Protocol
United States
$2,000,000,000 [52]
April 28, 1999Amteva Technologies
Voice over Internet Protocol
United States
$170,000,000 [53]
June 17, 1999TransMedia Communications
Gateways United
States$407,000,000 [54]
June 29, 1999StratumOne Communications
Synchronous optical networking
United States
$435,000,000 [55]
August 16, 1999
Calista Private branch exchange United
States$55,000,000 [56]
August 18, 1999
MaxComm Technologies
Voice over Internet Protocol
United States
$143,000,000 [57]
August 26, 1999
Monterey NetworksSynchronous optical networking
United States
$500,000,000 [58]
August 26, 1999
CerentSynchronous optical networking
United States
$6,900,000,000 [58]
August 31, 1999
IBM Networking Hardware Division
Computer networking United
States$2,000,000,000 [59]
September 15, 1999
COCOM A/S Cable modems Denmark
$65,600,000 [60]
September 22, 1999
Webline Communications
Contact management United
States$325,000,000 [61]
October 26, 1999
Tasmania Network Systems
Web cache United
States$25,000,000 [62]
November 9, 1999
Aironet Wireless Communications
Wireless LAN United
States$799,000,000 [63]
November 11, 1999
V-Bits Digital video United
States$128,000,000 [64]
December 16, 1999
Worldwide Data Systems
Information technology consulting
United States
$25,500,000 [65]
December 17, 1999
Internet Engineering Group
Synchronous optical networking
United States
$25,000,000 [66]
December 20, 1999
Pirelli Optical Systems
Fiber-optic communication Italy $2,150,000,000 [67]
January 19, 2000
Compatible Systems Virtual private networking United
States$317,000,000 [68][69]
January 19, 2000
Altiga Networks Virtual private networking United
States$250,000,000 [68][69]
February 16, 2000
Growth Networks Chipsets United
States$355,000,000 [70]
March 1, 2000
Atlantech Technologies
Network management Scotlan
d$180,000,000 [71]
March 16, 2000
JetCell Mobile telephones United
States$200,000,000 [72]
March 16, 2000
infoGear Technology Information management United
States$301,000,000 [73]
March 29, 2000
SightPath Content delivery United
States$800,000,000 [74]
April 11, 2000 PentaCom LAN switching Israel $118,000,000 [75]
April 12, 2000 Seagull Computer networking Israel $19,000,000 [76]
Semiconductor
May 5, 2000Arrowpoint Communications
LAN switching United
States$5,700,000,000 [77]
May 12, 2000 Qeyton SystemsWavelength-division multiplexing
Sweden $800,000,000 [78]
June 5, 2000 HyNEX Internet access Israel $127,000,000 [79]
July 7, 2000 Netiverse LAN switching United
States$210,000,000 [80]
2001 AuroraNetics Computer networking United
States$150,000,000 [81]
July 25, 2000 Komodo TechnologyVoice over Internet Protocol
United States
$175,000,000 [82]
July 27, 2000NuSpeed Internet Systems
iSCSI United
States$450,000,000 [83]
August 1, 2000
IPmobile Mobile software United
States$425,000,000 [84]
August 31, 2000
PixStreamMedia player (application software)
United States
$369,000,000 [85]
September 28, 2000
IPCell TechnologiesVoice over Internet Protocol
United States
$200,000,000 [86]
September 28, 2000
Vovida NetworksVoice over Internet Protocol
United States
$169,000,000 [86]
October 20, 2000
CAIS SoftwareIntegrated development environment
United States
$170,000,000 [87]
November 10, 2000
Active Voice Communication software United
States$266,000,000 [88]
November 13, 2000
Radiata Wireless networking United
States$295,000,000 [89]
December 14, 2000
ExiO Communications
Wireless networking United
States$155,000,000 [90]
July 27, 2001 Allegro Systems Virtual private networks United
States$181,000,000 [91]
May 1, 2002Hammerhead Networks
Computer networking United
States$173,000,000 [92]
May 1, 2002 Navarro Networks Computer networking United
States$85,000,000 [92]
July 25, 2002 AYR Networks Computer networking United
States$113,000,000 [93]
August 20, 2002
Andiamo Systems Data storage United
States$2,500,000,000 [94]
October 22, 2002
Psionic Software Intrusion detection United
States$12,000,000 [95]
January 24, 2003
Okena Intrusion detection United
States$154,000,000 [96]
March 19, 2003
SignalWorks Echo cancellation United
States$13,500,000 [97]
March 20, 2003
Linksys Computer networking United
States$500,000,000 [98]
November 12, 2003
Latitude Communications
Web conferencing United
States$80,000,000 [99]
March 12, 2004
Twingo Systems Computer security United
States$5,000,000 [100]
March 22, 2004
Riverhead Networks Computer security United
States$39,000,000 [101]
June 17, 2004 Procket Networks Routers United
States$89,000,000 [102]
June 29, 2004 Actona Technologies Data storage United
States$82,000,000 [103]
July 8, 2004 Parc Technologies Routers United
Kingdom$9,000,000 [104]
August 23, 2004
P-Cube Service Delivery Platform Israel $200,000,000 [105]
September 9, 2004
NetSolve Information technology United
States$128,500,000 [106][107]
September 13, 2004
dynamicsoft Communication software United
States$55,000,000 [108][109]
October 21, 2004
Perfigo Computer networking United
States$74,000,000 [110]
November 17, 2004
Jahi Networks Network management United
States$16,000,000 [111]
December 9, 2004
BCN Systems Routers United
States$34,000,000 [112]
December 20, 2004
Protego Networks Network security United
States$65,000,000 [113]
January 12, 2005
Airespace Wireless LAN United
States$450,000,000 [114][115]
April 14, 2005Topspin Communications
LAN switching United
States$250,000,000 [116][117]
April 26, 2005 Sipura TechnologyVoice over Internet Protocol
United States
$68,000,000 [118][119]
May 23, 2005 Vihana Semiconductors United
States$30,000,000 [120][121]
May 26, 2005FineGround Networks
Network security United
States$70,000,000 [122][123]
June 14, 2005M.I. Secure Corporation
Virtual private networks United
States$13,000,000 [124]
June 27, 2005 Netsift Computer networking United
States$30,000,000 [125]
July 22, 2005 KISS Technology Entertainment technology Denmark
$61,000,000 [126]
July 26, 2005 Sheer Networks Service management United
States$97,000,000 [127]
September 30, 2005
Nemo Systems Computer networking United
States$12,500,000 [128]
November 18, 2005
Scientific-Atlanta Digital cable United
States$6,900,000,000 [129]
November 29, 2005
Cybertrust Information gathering United
States$14,000,000 [130]
March 7, 2006
SyPixx Networks Surveillance United
States$51,000,000 [131]
June 8, 2006 MetreosVoice over Internet Protocol
United States
$28,000,000 [132]
June 8, 2006 AudiumVoice over Internet Protocol
United States
$19,800,000 [132]
July 6, 2006 Meetinghouse Computer security United
States$43,700,000 [133][134]
August 21, 2006
Arroyo Video Solutions
Video on demand United
States$92,000,000 [135][136]
October 10, 2006
Ashley Laurent Gateways United
States— [137]
October 25, 2006
Orative Mobile software United
States$31,000,000 [138]
November 13, 2006
Greenfield Networks Semiconductors United
States— [139]
December 15, 2006
Tivella Digital signage / IPTV United
States— [140]
January 4, 2007
IronPort Computer security United
States$830,000,000 [141][142]
February 9, 2007
Five Across Social networking service United
States— [143][144]
February 21, 2007
Reactivity Web services United
States$135,000,000 [145][146]
March 5, 2007
Utah Street Networks
Social networking service United
States— [147][148]
March 13, 2007
NeoPath Data storage United
States— [149][150]
March 15, 2007
WebEx Web conferencing United
States$3,200,000,000 [151][152]
March 28, 2007
SpansLogic Computer networking United
States— [153][154]
May 21, 2007BroadWare Technologies
Surveillance United
States— [155][156]
September 18, 2007
Cognio Mobile software United
States— [157][158]
September 27, 2007
LatigentBusiness performance management
United States
— [159][160]
October 23, 2007
Navini Networks WiMAX United
States$330,000,000 [161][162]
November 1, 2007
Securent Digital rights management United
States$100,000,000 [163][164]
April 8, 2008 Nuova Systems, Inc. Computer networking United
States$678,000,000 [165]
June 10, 2008 DiviTech A/S Digital service management Denmark
— [166]
July 23, 2008 Pure Networks, Inc. Computer software United
States$120,000,000 [167]
August 27, 2008
PostPath Email United
States$215,000,000 [168]
September 19, 2008
Jabber, Inc. Presence United
States— [169]
January 27, 2009
Richards-Zeta Building Intelligence
Building management systems
United States
— [170]
March 19, 2009
Pure Digital Technologies
Digital video United
States$590,000,000 [171][172]
May 1, 2009 Tidal SoftwareIntelligent Application Management
United States
$105,000,000 [173]
October 27, 2009
ScanSafe SaaS Web Security Provider United
Kingdom$183,000,000 [174][175]
November 2, 2009
Set-top box business of DVN
Cable China — [176]
December 18, 2009
Starent NetworksSystem Architecture Evolution
United States
$2,900,000,000 [177]
April 18, 2010 Tandberg Videoconferencing Norway $3,300,000,000 [178]
May 18, 2010MOTO Development Group
Product design United
States— [179]
May 20, 2010 CoreOptics Digital signal processing United
States— [180]
August 26, 2010
ExtendMedia Video United
States— [181]
September 2, 2010
Arch Rock Corporation
Smart Grid United
States— [182]
December 1, 2010
LineSider Technologies
Network Management Software
United States
— [183]
January 26, 2011
Pari NetworksNetwork Configuration and Change Management (NCCM)
United States
— [184]
February 4, 2011
Inlet TechnologiesAdaptive Bit Rate (ABR) digital media processing platforms
United States
$95,000,000 [185]
March 29, 2011
newScale Inc.[Cisco Intelligent Automation for Cloud]
United States
— [186]
August 21, 2011
AXIOSS Software and Talent
IT Service Management Software
Finland $31,000,000 [187][188]
August 29, 2011
Versly Integrated Software United
States— [189][190]
October 20, 2011
BNI Video Video United
States$99,000,000 [191][192]
March 15, 2012
NDS Group Conditional Access United
Kingdom$5,000,000,000 [193]
January 23, 2013
Intucell Mobile Software Israel $475,000,000 [194]
January 29, 2013
Cognitive Security Cyber Threat Protection Czech [195]
Read more: http://www.answers.com/topic/cisco-systems-acquisitions#ixzz2KT3iMAPg
AcquisitionsMain article: List of acquisitions by Cisco Systems
Cisco acquired a variety of companies to spin products and talent into the company. In 1995–1996 the company completed 11 acquisitions.[26] Several acquisitions, such as Stratacom, were the biggest deals in the industry when they occurred. During the Internet boom in 1999, the company acquired Cerent Corporation, a start-up company located in Petaluma, California, for about US$7 billion. It was the most expensive acquisition made by Cisco to date, and only the acquisition of Scientific Atlanta has been larger. Several acquired companies have grown into $1Bn+ business units for Cisco, including LAN switching, Enterprise Voice over Internet Protocol (VOIP) platform Webex, and home networking. The latter came as result of Cisco acquiring Linksys in 2003 and in 2010 was supplemented with new product line dubbed Cisco Valet. Cisco announced on March 15, 2012 that it is acquiring NDS Group for a $5B.[27] This transaction was expected to complete in 4–6 months.
In the recent merger deals, Cisco bought Starent Networks (a mobile technology company) and Moto Development Group, a product design consulting firm that helped develop Cisco's Flip video camera.[28] Also in 2010, Cisco became a key stakeholder in e-Skills Week. In March 2011, Cisco completed the acquisition of privately held network configuration and change management solutions company Pari Networks.[29]
Although many buy-ins (such as Crescendo Networks in 1993, Tandberg in 2010) resulted in acquisition of flagship technology to Cisco, many others have failed – partially or completely. For instance, in 2010 Cisco occupied a meaningful share of the packet-optical market,[30] revenues were still not on par with US$7 billion price tag paid in 1999 for Cerent. Some of acquired technologies (such as Flip from Pure Digital) saw their product lines terminated.[31]
Cisco Systems routes packets and routs competitors with equal efficiency. Dominating the market for Internet protocol-based networking equipment, the company provides routers and switches used to direct data, voice, and video traffic. Other products include remote access servers, IP telephony equipment, optical networking components, Internet conferencing systems, set-top boxes, and network service and security systems. The company sells its products primarily to large enterprises and telecommunications service providers, but it also markets products designed for small businesses. Cisco gets nearly 60% of its sales from the Americas.
Read more: http://www.answers.com/topic/cisco#ixzz2KT654RpG
Key numbers for fiscal year ending July, 2012: Sales: $46,061.0MOne year growth: 6.6%Net income: $8,041.0MIncome growth: 23.9%
Officers:Chairman and CEO: John T. ChambersPresident and COO: Gary B. MooreEVP and CFO: Frank Calderoni
Read more: http://www.answers.com/topic/cisco#ixzz2KT69N49V
Competitors:Alcatel-LucentHewlett-PackardJuniper Networks
Cisco Systems, Inc. is a leading supplier of communications and computer networking products, systems, and services. The company's product line includes routers, switches, remote access devices, protocol translators, Internet services devices, and networking and network management software, all of which link together geographically dispersed local area networks (LANs), wide area networks (WANs), and the Internet itself. Cisco serves three main market segments: large organizations, including corporations, government entities, utilities, and educational institutions; service providers, including Internet service providers, telephone and cable companies, and providers of wireless communications; and small and medium-sized businesses whose needs include operating networks, connecting to the Internet, and connecting with business partners. Increasingly, Cisco's products are appearing in the consumer marketplace. Cisco operates globally, deriving roughly 44 percent of its sales from overseas business.
Beginnings in Multiprotocol Routers
Cisco Systems was founded in December 1984 in Menlo Park, California, by a husband and wife team from Stanford University, Leonard Bosack and Sandra Lerner. Bosack was the manager of the computer science
department's laboratory, and Lerner oversaw the computers at the graduate school of business. At Stanford, Bosack devised a way to connect the two local area networks in the respective departments where he and his wife worked, 500 yards across campus.
Lerner and Bosack initially tried to sell the internetworking technology that Bosack had developed to existing computer companies, but none were interested. They then decided to start their own business, Cisco Systems, based on this technology (they came up with the name, a shortened form of San Francisco, while driving across the Golden Gate Bridge). Bosack and Lerner were joined by colleagues Greg Setz, Bill Westfield, and Kirk Lougheed, as cofounders. Stanford University later tried to obtain $11 million in licensing fees from the new company, because Bosack had developed the technology while an employee at the university, but eventually the university settled for $150,000 and free routers and support services.
The company was established on a very tight budget. In fact, Bosack and Lerner had to mortgage their house, run up credit card debts, and defer salaries to their friends who worked for them in order to get the venture off the ground, and, even after two years of business, Lerner maintained an outside salaried job to supplement the couple's income.
Cisco's primary product from the beginning was the internetworking router, a hardware device incorporating software that automatically selects the most effective route for data to flow between networks. Cisco's routers pioneered support for multiple protocols or data transmission standards, and could therefore link together different kinds of networks, those having different architectures and those built on different hardware, such as IBM-compatible personal computers, Apple Macintosh computers, UNIX workstations, and IBM mainframes. Cisco thus became the first company to provide a commercial multi-protocol router when it shipped its first product in 1986, a router for the TCP/IP (Transmission Control Protocol/Internet Protocol) protocol suite. A year later, Cisco was selling $250,000 worth of routers per month. Sales for the fiscal year ending July 1987 were $1.5 million, and the company had only eight employees at the time.
Cisco initially marketed its routers to universities, research centers, the aerospace industry, and government facilities by contacting computer scientists and engineers via ARPANET, the precursor to what would become the Internet. These customers tended to use the TCP/IP protocols and UNIX-based computers. In 1988, the company began to target its internetworking routers at mainstream corporations with geographically dispersed branches that used different networks. To that end, Cisco developed routers serving an even greater array of communications protocols and subsequently distinguished its routers by enabling them to support more protocols than those of any other router manufacturer. By the late 1980s, when the commercial market for internetworking began to develop, Cisco's reasonably priced, high-performance routers gave it a head start over the emerging competition.
Although Cisco had a high rate of sales growth, the young company was still short of cash; in 1988 Bosack and Lerner were forced to turn to a venture capitalist, Donald T. Valentine of Sequoia Capital, for support. Valentine, however, required that the owners surrender to him a controlling stake in the company. Valentine thus became chairperson and then hired an outsider, John Morgridge, as the company's new president and chief executive officer. Morgridge, who had an M.B.A. from Stanford University, was chief operating officer at laptop computer manufacturer GRiD Systems Corp. and prior to that had spent six years as vice-president of sales and marketing at Stratus Computer. Morgridge replaced several Cisco managers, who were friends of Bosack and Lerner, with more qualified and experienced executives. In February 1990, Cisco went public, after which Bosack and Lerner began selling their shares. Sales for the fiscal year ending July 1990 were $69.8 million, net income was $13.9 million, and the company had 254 employees.
Under Morgridge, Bosack had been given the title of chief scientist and Lerner was made head of customer service. However, Lerner reportedly did not get along well with Morgridge and, in August 1990, she was fired, whereupon Bosack also quit. When they left the company, Bosack and Lerner sold the remainder of their stock for $100 million, for a total divestiture of about $200 million. The couple subsequently gave away the majority of their profits to their favorite charities.
Early 1990s: Rapid Growth As Networks Proliferate
Meanwhile, Morgridge built up a direct sales force to market the products to corporate clients. At first, Cisco's corporate clients were the scientific departments of companies which already maintained large internal networks. Later, Cisco was able to market its products to all kinds of major corporations to help them link the computer systems of their headquarters, regional, and branch offices. As Cisco's client base grew, the company's greatest challenge became meeting customer support service needs. The large size of the network systems for which Cisco supplied products made the user support task especially complex.
The company grew at a tremendous rate as its market rapidly expanded. In the early 1990s, companies of all sizes were installing local area networks (LANs) of personal computers. As such, the potential market for linking these networks, either with each other or with existing minicomputers and mainframe computers, also grew. Cisco's sales jumped from $183.2 million in 1991 to $339.6 million in 1992, and net income grew from $43.2 million to $84.4 million during the same period. In 1992, Fortune magazine rated Cisco as the second fastest growing company in the United States. In its role as the leading internetworking router provider, Cisco could redefine and expand the market as it grew.
While new communications technologies became widespread, Cisco adapted and added the capabilities of handling new protocols to its products. In the fall of 1992, Cisco introduced Fiber Distributed Data Interface (FDDI) and Token-Ring enhancements to its high-end router. Around the same time, the company also introduced the first Integrated Services Digital Network (ISDN) router for the Japanese market.
Until 1992, Cisco's products had not addressed IBM's System Network Architecture (SNA), a proprietary network structure used by IBM computers. In September 1992, however, after IBM announced plans to license its Advanced Peer-to-Peer Networking (APPN) protocol used for SNA, Cisco responded by announcing plans for a rival Advanced Peer-to-Peer Internetworking (APPI) protocol for supporting SNA. By August 1993, Cisco had decided not to develop a rival protocol, because IBM made it clear that APPN would be a more open, multivendor protocol than originally intended. Cisco then proceeded to work with IBM on further defining the APPN standard and bought a license to use APPN technology.
The emergence of asynchronous transfer mode (ATM) technology as a new standard method for multiprotocol data communications posed a challenge to Cisco and the router industry. ATM is a cell-switching technique that can provide high-speed communications of data, voice, video, and images without the use of routers. In early 1993, Cisco entered into a joint development project with AT&T and StrataCom to develop standards that would ensure that ATM operated within existing Frame Relay networks. Cisco also became one of the four founding members of the ATM Forum to help define the emerging standard. In February 1993, Cisco announced a strategy to include ATM among the protocols supported by its products. In 1994, Cisco introduced its first ATM switch.
In January 1993, Cisco introduced a new flagship product, the Cisco 7000 router, which featured a 50 percent improvement in performance over the AGS+, Cisco's existing high-end router. In June of that year, Cisco introduced a new low-end, lower-priced product line, the Cisco 2000 router family. The Cisco 2000 was aimed at companies desiring to link their smaller, remote branches or even remote individual employees, but unwilling to pay a premium price. Also during this time, the first network with over 1,000 Cisco routers was created.
International sales became an important part of Cisco's business. Subsidiaries were established in Japan and Australia, and a European Technical Assistance Center was established in Brussels, Belgium. In March 1993, Cisco Systems (HK) Ltd. became a new subsidiary in Hong Kong. International sales steadily increased, accounting for 35.6 percent of sales in 1991, 36 percent in 1992, 39 percent in 1993, and 41.9 percent in 1994. Most of Cisco's international sales were through distributors, whereas in the United States the majority of sales (65 percent in early 1994) were made directly to the end users.
Cisco also began to market its technology, especially its software, more aggressively to long-distance telephone companies, as the deregulation of U.S. telephone carriers enabled these companies to provide more kinds of data communications products and services. For example, Cisco entered into a joint marketing agreement with MCI International to integrate Cisco's routers into end-to-end data networks over telephone lines. In 1992, Cisco entered new distribution agreements with Bell Atlantic Corp. and U.S. West Information Systems Inc. Cisco also signed
marketing agreements in 1993 with Pacific Bell, whereby Cisco became a preferred router supplier for the company's network systems.
Cisco similarly began contracting with major European telecommunications companies at about the same time. British Telecom became an original equipment manufacturer (OEM) client of all of Cisco's products. Other European telecommunications companies that entered into OEM relationships with Cisco included Alcatel of France and Siemens A.G. of Germany. Olivetti of Italy agreed to market Cisco's products under a value-added reseller agreement late in 1992.
Cisco made other strategic alliances to position itself better in the maturing internetworking market. To reach out to less technical clients, Cisco entered into joint agreements with Microsoft Corporation to market Cisco's first PC-based router card with Microsoft's Windows NT Advanced Server networking software through Microsoft's marketing channels. Similarly, Cisco established a partnership with Novell to integrate Cisco's routers with Novell's Netware network software so as to provide links between Netware and UNIX-based networks. Additionally, Cisco began working with LanOptics Ltd. to develop remote-access products.
1993-94: First Wave of Acquisitions
In September 1993, Cisco made its first acquisition. For $95 million, it acquired Crescendo Communications, which had pioneered products for a new technology called Copper Distributed Data Interface (CDDI). Crescendo's development of ATM technology was also a leading reason for the acquisition. Crescendo Communications was renamed the Workgroup Business Unit, and its switching technologies under development were later incorporated into Cisco's routers. Cisco made its second acquisition, that of Newport Systems Solutions for $93 million in stock, in August 1994. Newport Solutions sold the LAN2LAN product line, software used in linking local area networks.
Early in 1994, Cisco announced a new networking architecture, CiscoFusion, to provide clients with a gradual transition from routers to the new switched networking technologies of ATM and LAN switching. CiscoFusion allowed users to take advantage of both routing and switching techniques. As part of this architecture, several new switching products were introduced in March 1994, including the ATM Interface Processor and the Catalyst FDDI-to-Ethernet LAN switch. The latter was the first new product of the Workgroup Businesses Unit since the acquisition of Crescendo.
During this time, Cisco moved its headquarters from one end of Silicon Valley to the other, from Menlo Park to a newly constructed office building complex in San Jose, California. The growing size of the company had necessitated larger office space. The company's workforce had grown from 1,451 in July 1993 to 2,262 in July 1994, as Cisco hired talent from smaller, struggling networking companies which were laying off personnel. In 1994, Cisco topped $1 billion in sales, ending the year on July 31, 1994, with $1.24 billion in net sales, a 92 percent increase over the previous year, and $314.9 million in net income, 83 percent more than in 1993. Later in 1994, in October, Cisco completed two more acquisitions of firms involved in the switching sector. It spent $240 million for Kalpana, Inc., a maker of Ethernet switching products; and $120 million for LightStream Corp., which was involved in ATM switching and Ethernet switching and routing.
Astounding Growth Under John Chambers Starting in 1995
In January 1995 John T. Chambers was named CEO of Cisco, with Morgridge becoming chairman and Valentine vice-chairman. Chambers, who had previous stints at IBM and Wang Laboratories before joining Cisco in 1991, stepped up the company's acquisition pace to keep ahead of its rivals and to fill in gaps in its product line, aiming to provide one-stop networking shopping to its customers. The company completed 11 acquisitions in 1995 and 1996, including Grand Junction, Inc., maker of Fast Ethernet and Ethernet switching products, purchased for $400 million in September 1995; and Granite Systems Inc., a maker of high-speed Gigabit Ethernet switches, bought for $220 million in September 1996.
The largest deal during this period, however, was that of StrataCom, Inc., a $4.67 billion acquisition completed in April 1996. StrataCom was a leading supplier of ATM and Frame Relay WAN switching equipment capable of handling voice, data, and video. The addition of Frame Relay switching products to the Cisco portfolio was
particularly important as that technology was being rapidly adopted by telecommunications companies needing to increase the capacity of their networks. The deal was also a key step in Cisco's attempt to move beyond its core customer area of "enterprise" customers (large corporations, government agencies, utilities, and educational institutions) into the area of telecommunications access providers, an area in which it faced entrenched and formidable competition in the form of such giants as Alcatel, Lucent Technologies Inc., and Nortel Networks Corporation.
Cisco continued its blistering acquisitions pace in 1997 and 1998, completing 15 more deals. The largest of these was the April 1998 purchase of NetSpeed, Inc., a specialist in digital subscriber line (DSL) equipment, an emerging technology providing homes and small offices with high-speed access to the Internet via existing telephone lines. Another emerging networking technology was that of voice-over-IP (Internet Protocol), which essentially enables the routing of telephone calls over the Internet. The acquisitions of LightSpeed International, Inc. in April 1998 and Selsius Systems, Inc. in November 1998 helped Cisco gain a significant presence in the Internet telephony sector. The areas of DSL and voice-over-IP provided additional examples of Cisco's strategy of acquiring its way into emerging networking sectors.
By the late 1990s Cisco Systems was the undisputed king of the networking world. In July 1998 the company's market capitalization surpassed the $100 billion mark, just 12 years after its initial public offering, a time frame believed to be a record for achieving that level. Revenues reached $12.15 billion by 1999, a more than sixfold increase over the 1995 result of $1.98 billion. During 1999 Cisco became even more acquisitive, snatching up an additional 17 companies, in the process gaining presences in two more emerging areas: fiber-optic networking and wireless networking. Several fiber-optic companies were acquired, including start-up Cerent Corporation, which was purchased for about $7.2 billion in the company's largest acquisition yet. Fiber-optic networks were particularly being built by telecommunications firms aiming to take advantage of their capacity for handling massive quantities of voice, video, and data, making Cisco's entry into this segment of vital importance.
In late 1999 Cisco announced that it would acquire the fiber-optic telecommunications equipment business of Italy's Pirelli S.p.A. for about $2.2 billion, gaining Pirelli gear that takes a beam of light and breaks it into as many as 128 "colors," each of which can carry a separate stream of voice, data, or video. Cisco's key wireless acquisition also came in late 1999 with the announcement of the $800 million purchase of Aironet Wireless Communications, Inc., maker of equipment that creates LANs without wires in small and medium-sized businesses. The technology was also expected to be transferred to the home environment, where Cisco aimed to capture what was predicted to be an area of rapid early 21st century growth: the networked home.
During 1999 Cisco also acquired GeoTel Communications Corp., a maker of software for routing telephone calls, for about $1.9 billion.
By early 2000, following 1999's frenzied bull market in high-tech stocks, Cisco's market value surpassed $450 billion, making it the third most valuable company in the world, behind Microsoft and General Electric Company (for a brief period in late March, Cisco actually ranked as the most valuable company in the world, with a total market capitalization of $555 billion). Revenues were soaring, as were earnings, which reached $906 million for the second quarter of the 2000 fiscal year alone. Rather than slowing it down, Chambers planned to increase the company's acquisition pace, with the addition of as many as 25 companies during 2000. Through acquisitions and strategic alliances with such industry giants as Microsoft, Hewlett-Packard Company, and Intel Corporation, Chambers aimed to increase Cisco Systems' revenues to $50 billion by 2005.
Transformation in Early 2000s
Chambers only made it halfway toward his financial goal by 2005, but the fact that Cisco doubled its revenue volume during the first part of the decade represented a remarkable achievement considering the prevailing conditions in the technology sector. Chambers, described as irrepressibly optimistic and relentlessly upbeat by industry observers, was slow to react to what became the most severe downturn in the history of the industry. Rivals Lucent Technologies and Gateway, Inc., among others, slashed overhead and trimmed their operations as market conditions soured, but Chambers remained sanguine until he was forced to recognize the severity of the situation. During a two-week trip abroad in March 2001, he met with numerous customers, hearing from each that spending
was to be drastically reduced in the coming months. Chambers returned home and began what he referred to as "the most challenging time in my business career," in a November 24, 2003 interview with Business Week. He laid off 8,500 workers, nearly one-fifth of Cisco's payroll, and implemented sweeping changes throughout the company, reigning in the freewheeling attitude toward expansion that had led to the acquisition of 73 companies between 1993 and 2000 and replacing it with discipline, order, and restraint. "Process was a dirty word at Cisco, including for the CEO," Chambers conceded in his interview with Business Week.
Although Chambers admitted he was late in recognizing the seriousness of the situation, his actions ensured that further layoffs were not needed. The company, adhering to a more austere, focused strategy, made great gains as conditions in the technology sector began to improve. Between 2001 and 2003, Cisco's share of the $92 billion communications-equipment market increased from 10 percent to 16 percent, the biggest increase in the company's history. Significantly, the return of favorable economic conditions did not signal the end of wholesale changes at Cisco. Chambers began steering Cisco in a new direction following the downturn in the technology sector, opening a new avenue of growth for the company to exploit in the years ahead.
Throughout its development, Cisco had shied from entering the consumer market, preferring the stability and relatively higher profit margins enjoyed by selling networking equipment to corporations and communications providers. In 2003, Chambers began to change tack, beginning with the purchase of Linksys Group, a manufacturer of wireless routers for consumers. The foray proved successful, encouraging Chambers, who was back to his ebullient self, to delve deeper into the consumer market. In July 2005, he purchased a manufacturer of networked DVD players named KISS Technology, a small acquisition that served as a stepping stone for a massive acquisition announced later in the year. In November 2005, Cisco announced it was acquiring Scientific-Atlanta, Inc., a Lawrenceville, Georgia, manufacturer of cable television set-top boxes. Cisco agreed to pay $6.9 billion for Scientific-Atlanta, which generated $1.9 billion in revenue in 2005, using the purchase to complete what industry insiders referred to as the "quadruple play" package. Cable and telephone companies were interested in providing a bundle of services to their customers, a package of converged networks that included broadband Internet access, Internet-based telephone service, wireless calling, and video services such as video-on-demand. Cisco was well equipped to provide the first three types of services, but it lacked the ability to provide anything substantial in the video realm. The purchase of Scientific-Atlanta gave Chambers quadruple play capabilities, opening a new, vast market for the company. "Once you add video," Chambers explained in a November 21, 2005 interview with Business Week Online, "not just in products, but in being able to integrate them all together, that gives us leadership that is very, very unique."
As Cisco prepared to enter what was being billed as the "bundle wars," the company stood poised to reap the benefits of Chambers bold move.
Principal Subsidiaries
Cisco Systems Canada Limited; Cisco Systems Europe, S.A.R.L. (France); Cisco Systems Import/Export Corporation (U.S. Virgin Islands); Cisco Systems Belgium, S.A.; Cisco Systems Limited (U.K.); Cisco Systems Australia PTY. Limited; Nihon Cisco Systems, K.K. (Japan); Cisco Systems de Mexico, S.A. de C.V.; Cisco Systems New Zealand Limited; Cisco Systems (HK) Limited (Hong Kong); Cisco Systems GmbH (Germany); Cisco Systems (Italy) Srl; Cisco Systems GmbH (Austria); Cisco do Brasil Ltda. (Brazil); Cisco Systems (Korea) Ltd.; VZ, Cisco Systems, C.A. (Venezuela); Cisco Systems South Africa (Pty) Ltd.; Cisco Systems Sweden Aktiebolag; Cisco Systems (Switzerland) AG; Cisco Systems Capital, B.V.; Cisco Systems International Netherlands, B.V.; Cisco Systems Czech Republic, s.r.o.; Cisco Systems Spain, S.L.; Cisco Systems Argentina S.A.; Cisco Systems Chile, S.A.; Cisco Sistemas de Redes S.A. (Costa Rica); Cisco Systems Malaysia, Sdn. Bhd.; Cisco Systems (USA) Pte. Ltd., Singapore; Cisco Systems Thailand, Ltd.; Cisco Systems Peru, S.A.; Cisco Systems Greece, S.A.; Cisco Systems Poland, Sp.zo.o; Cisco Systems Israel, Ltd.; Cisco Systems Internetworking Iletsim Hizmetlieri Ltd. Sirketi (Turkey); Cisco Systems (India), Ltd.; Cisco Systems Capital Corp.; Cisco Systems (Taiwan), Ltd.; Cisco Systems (Colombia), Ltda.; Cisco Technology, Inc.; Cisco Systems Sales & Service, Inc.; Cisco Systems Co. (Canada); Telebit Corporation; Cisco Systems Danmark AS (Denmark); Cisco Systems Norway AS; Cisco Systems Hungary, Ltd.; Cisco Systems Management B.V.; Cisco Systems (Puerto Rico) Corp.; Cisco Systems Finland Oy; Cisco Systems (China) Networking Technologies Ltd.; Cisco Systems Romania SRL; Cisco
Systems Croatia Ltd. for Trade; Cisco Systems Slovakia, spol. sr.o; Latitude Communications Pte. Ltd. (Singapore); Protego Networks LLC; Radiata, Inc.; Telebit Corporation; Topspin Communications LLC.
Principal Competitors
ADC Telecommunications, Inc.; Alcatel; Cabletron Systems, Inc.; Compaq Computer Corporation; D-Link Corporation; ECI Telecom Ltd.; Fujitsu Limited; Hewlett-Packard Company; Intel Corporation; International Business Machines Corporation; Juniper Networks, Inc.; Kingston Technology Company; Lucent Technologies Inc.; Madge Networks N.V.; Microsoft Corporation; Motorola, Inc.; MRV Communications, Inc.; NEC Corporation; Network Associates, Inc.; Newbridge Networks Corporation; Nokia Corporation; Nortel Networks Corporation; Novell, Inc.; Sterling Software, Inc.; Telefonaktiebolaget LM Ericsson; 3Com Corporation.
Read more: http://www.answers.com/topic/cisco#ixzz2KT6MAAtx
Cisco Systems a company that has reinvented itself time and again has
proved that the key to corporate success lies in an organizational structure
that is both responsive and in tune with the changing industry and market
requirements.
Phase-1: The Emergence of a Giant
In April-1997 Cisco structured its products and solutions into three
customer segments: Enterprise, Small/Medium business, and Service
Provider. The organizational structure was crafted to address two major
new market opportunities at that time: the service provider migration to IP
services and the adoption of IP products by small and medium-sized
businesses through channel distribution. The change was a marked
departure from a product-focused structure, which had been Cisco’s hallmark
since inception back in1987, to a customer-oriented, solutions-based
structure.
All of Cisco’s research-and-development and solutions marketing would be
organized under the three Lines of Business. The Line of Business teams
defined and implemented both market and operational strategies that
enabled them to deliver end-to-end solutions to their target customers. The
new organizational alignment meant increased focus on specific customer
segments to provide complete end-to-end solutions, including integrated
software, hardware and network management. The different market
segments at the time had nothing in common. The fact that Cisco was riding
high on the imploding growth in the networking industry meant Cisco did not
have to worry so much on costs since margins very high.
An analysis on the effectiveness of “Product Based” organizational
structure reveals the following attributes.
Product Centric Organization Effectiveness
Knowledge Sharing Low
Ability to reduce Costs Low
Fostering Innovation High
Control and Coordination Medium
Addressing Customer / Market requirements
High
Efficiency in Resource Utilization Low
Phase-2: The Dot-Com Meltdown
In August-2001, Cisco Systems realigned the company's focus around
changing industry and customer requirements and to reinforce the company
as a dominant force in the networking industry. Customer segments and
product requirements that were distinct in the past had become blurred. The
downturn in the networking industry that followed the broad meltdown
across the technology industry in early 2000 meant Cisco had to act quickly
to minimize costs and reduce overhead. To respond to these changes Cisco
zeroed in on a centralized engineering and functionally driven organizational
structure.
The centralized structure was developed to bring Cisco closer to its
customers, to encourage teamwork and to eliminate product and resource
overlaps and more importantly to provide the industry's broadest family of
products united under a consistent architecture designed to help Cisco’s
customers improve productivity and profitability. The rationale behind a
centralized organizational structure was to design all equipments using a
baseline standard and architecture, which lowered the cost of product
development and manufacture. A centralized organizational structure
fostered deeper sharing of knowledge and components across Cisco product
groups while promoting more consistent manufacturing and testing to realize
economies of scale.
A centralized organization structure enabled Cisco to respond successfully to
changing market conditions. The company’s focus was on reigning in costs
and respond to revenue shortfalls from declining growth prospects within the
industry. The emphasis shifted from delivering new product launches or
innovation to survival. An analysis on the effectiveness of “Centralized”
organizational structure reveals the following attributes.
Centralized Organization Effectiveness
Knowledge Sharing High
Ability to reduce Costs High
Fostering Innovation Low-Medium
Control and Coordination High
Addressing Customer / Market requirements Low
Efficiency in Resource Utilization High
Phase-3: Convergence
In December-2007 Cisco announced a new “Technology Organization”
structure to address the challenges imposed by the next phase of Internet
growth and productivity centered on the demands of tremendous growth in
video, the revolution in the data center, collaborative and networked Web
2.0 technologies, where the network emerged as a platform for all forms of
communications and data management. The new organizational structure
enabled Cisco to position itself for growth in new markets and cater to new
and emerging markets in China, Brazil and India.
“The Technology Organization”:
The changes were designed to enhance Cisco's effectiveness and efficiency
globally in delivering integrated products and solutions, as well as to provide
greater synergies in its development process. The need for innovation and
ability to cater to different market segments that had different product
requirements necessitated a move toward a product-technology based
organizational structure. With the industry evolving towards a services based
Pay-As You Go” revenue model Cisco had to develop products with
scalability, reliability and adaptability in mind. The emphasis on software and
centralized nature of the Software Group allowed Cisco to access resources
globally while driving integration and interoperability across all of Cisco
product lines.
An analysis on the effectiveness of the “Technology Organization”
structure reveals the following attributes.
Technology Centric Organization Effectiveness
Knowledge Sharing (Across Divisions) Medium
Ability to reduce Costs Low
Fostering Innovation High
Control and Coordination Medium - High
Addressing Customer / Market requirements High
Efficiency in Resource Utilization Medium
