Cisco's ability to grow the business seems limited. Companies in Asia are turning to local companies like Huawei, Futurewei, and ZTE for network equipment -- both for political reasons and cheaper pricing. There is some growth in Europe, but many companies are turning to other suppliers. Ericsson and Alcatel have done well in the carrier space, while second tier network vendors have taken market share. South America is in a financial downturn, and sales are shrinking overall.
Cisco has done better in the US, with some 10% year-over-year growth in the enterprise market. Sales of UCS servers continue also to grow strongly, and the recent acquisition of Sourcefire has increased revenue in security.
Chambers And The Future
There are many investors indicating that it is time for John Chambers to step down from the CEO role. Equally, it's hard to imagine that Chambers wants to leave when Cisco is struggling; he appears to be a person who wants to leave on a high note. Even if Chambers appoints a successor to be CEO, he is likely to remain Chairman of the Board and maintain control of the company.
If ACI fails to ignite customer interest to the point where it sustains Cisco profit and revenue, calls for change at the top job will escalate. Analysts say that Chambers has credibly made the case for Cisco's current challenge and is providing a compelling vision for recovery.
Big Week To Come
There is no question that Cisco is struggling to maintain its market position in face of product commoditization driving lower product prices, the rise of Chinese competitors in major markets, as well as public cloud services from Amazon, Google, and Microsoft stealing customers away.
And Cisco ACI looks like a good strategy. It solves real business problems, offer portal and automation to network. Cisco has demonstrated the ability to integrate with many of its own products after making the commitment in November to converge the previously independent business units into a coherent vision.
Cisco has enormous customer loyalty through it's incumbency, large salesforce, and certification programs. At the same time, it has the credibility with other technology companies to build a platform those companies can join. Cisco Live brings many of Cisco's most loyal customers together to share new visions, dive into products, and keep them close to Cisco staff.
This week will provide more details on Application Centric Infrastructure and allow closer examination of its capabilities. The question of customer acceptance and adoption against a perception of technology lock-in and pricing fears is one that will be repeated.