Can Cisco Survive Success?

Several years ago, in the aftermath of the dot-com bust, Cisco was looking like a very sick company. So many businesses using its equipment had gone under, you could practically hold a yard sale and sell the stuff for pennies on the dollar -- or just auction it all off en masse on eBay.

The company posted a $1 billion net loss, laid off thousands, and was looking for a new strategy -- any strategy -- that could see it through the hardest times the technology industry had ever seen.

Compared to then, Cisco today is fat and happy. Its core business, selling routers and switches, is thriving. And as IP networking expands to conquer voice as well as data, and becomes used in everything from cars to refrigerators, Cisco is well-positioned to remain the 800-pound gorilla of the networking world. It dominates the high end, and through its acquisition of Linksys, has a dominant role in fast-growing home networking and small-business networking as well.

But the question remains: Is selling routers, switches and associated hardware enough to keep the company growing? Most likely not. And Cisco recognizes that. So it has refined its focus away from selling boxes and wires, and instead has a new mantra: "architecture."

CEO John Chambers says the point is to move customers "from a box, to a system, to an architectural focus." And the word has filtered down to the troops. In an interview with Network Computing, Pierre-Paul Allard, VP of enterprise marketing, used the word architecture at least 50 times during a 60-minute interview.Lest you think all this sounds too New Age-y to be of much use, fear not: The point of this is to help Cisco sell lots of new products and branch out into new areas. For example, it has targeted storage, and has been growing its storage-switch market share at a clip that should be making storage-switch makers Brocade, McData, and QLogic sit up and take notice.

The company also has security in its cross-hairs. In July it introduced its Network Admissions Control technology. And in a blockbuster alliance, it has teamed with Microsoft on network-access security, collaborating to make their emerging products for network security compatible. Cisco has made security deals with IBM as well. As has become its habit, Cisco expands its technology through acquisition, such as with its purchase of privately held Perfigo, Inc., a developer of packaged network access control solutions.

Additionally, it focuses on the future with converged voice and data products, most recently enhancing its IP telephony system by providing voice media and signaling encryption for new and currently installed 7940G and 7960G IP telephones. IP voice connections will now be encrypted from the phones themselves.

All this has paid off. In its most recent quarter, Cisco's net income rose 41 percent from a year ago to $1.38 billion--the highest quarterly net income in its history -- on 26 percent higher net sales of $5.93 billion. For the fiscal year, net income was up 23 percent from a year earlier to $4.4 billion, on 17 percent higher net sales of $22.0 billion.

But what of the future? There are those who say that the company's acquisitions binge is problematic, and that it won't be able to incorporate new companies into its overall strategy and culture. Others say that the successful purchase of Linksys shows this isn't the case. Either way, Cisco will be with us, and you ignore its products, services, and strategy at your own peril. Cisco: On Its Feet and On the Prowl
The reigning network leader has bounced back from tough times with record revenue and profits. But can Cisco keep innovating while fending off challengers?

Microsoft And Cisco Partner On Network-Access Security
The vendors will collaborate on their approaches to PC quarantines, but Microsoft's Network Access Protection gets delayed by more than a year.

Cisco Takes On Storage
Whether you go with Fibre Channel or iSCSI, Cisco believes in covering all the networked storage bases.

Cisco Enhances IP Phone Security
New version of Cisco's IP telephony system provides voice media and signaling encryption.

Cisco Adds To Security Offerings With Perfigo Purchase
Buys privately held Perfigo, Inc., a developer of packaged network access control solutions. Cisco And IBM Team Up For Endpoint Security Solution
They combine IBM Tivoli security policy software with Cisco Network Admission Control to enforce enterprise-wide policies.

DEEP BACKGROUND

Cisco, Juniper Rivalry Heats Up With Ingram Deal
Router vendor's products may appeal to frustrated Cisco resellers

Sneak Preview: Cisco's 9216i Storage Switch
This new storage switch lets you safely managing remote data storage using FC over IP.

CA Joins Cisco-Sponsored Security Compliance Group
CA announces its membership into Cisco's Network Admission Control program with two new NAC-compliant products. New Cisco Reseller Program Targets SMBs
Aims Security Virtual Private Network/Firewall Express specialization at channel partners who serve SMBs.