Cisco's moment of truth

The networking giant made more money from new products and services than from routers and switches

Cisco achieved a milestone in its most recent fiscal quarter, one with profound implications for the future of the company: Cisco made more money from its new products and services than it did from routers and switches.

Naturally, the network giant has long known this day would come, and has been more than just preparing for it. Cisco has been embracing the change, actively pursuing it for years. Every major move has been toward what it calls "market adjacencies," toward products that by some logic relate to Cisco's traditional, core markets but are actually brand-new territory for Cisco.

That's the logic that has gotten this router vendor neck-deep into selling everything from set-top boxes to blade servers to video cameras. In fact, the company has its hands in about 30 "market adjacencies" right now.

But this strategy is creating difficulties for Cisco even as it creates opportunities. In the data center, partners such as HP and IBM are now bitter rivals. In the retail stores, Cisco is still struggling to understand what consumers will buy - and at what price. And meanwhile, in its router backyard, Cisco is losing market share to companies with a sharper focus.

Overall, the scattershot approach of getting into 30 new markets - of fighting a war on dozens of different fronts - is starting to take its toll. Analysts in Jim Duffy's insightful story this week (page 1) argue that Cisco has been too aggressive, trying to maintain a rate of growth that may no longer be realistic as a $40 billion company. Indeed, the story also reports that Cisco is quietly curbing its growth goals.

Certainly, this is the road Cisco had to take. The company's longstanding determination to be first or second in every market it competed in served it well. When it had dominated its primary markets, Cisco needed new worlds to conquer; it found them and it went after them.

But now Cisco is at an interesting point in time. It's not a young company anymore, and it can't move like a young company, no matter how many start-ups it absorbs. If Cisco were a person, you might say it's graduating from college. It's been Big Man on Campus. It's done a lot of experimentation. But now it's time for Cisco to figure out what it wants to be when it grows up.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags business issuesciscoIBMrouterfinancial resultscorporate issuesEthernet SwitchLAN & WAN

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Jeff Caruso

Network World
Show Comments



Victorinox Werks Professional Executive 17 Laptop Case

Learn more >



Back To Business Guide

Click for more ›

Brand Post

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?