What's Wrong at Cisco?

Recently, July 2011, Cisco announced a major layoff - about 6500 people are being let go. This is a public acknowledgment of things going wrong at Cisco.

Apart from the highly publicized jettisoning of "Flip" video cameras and decision to retreat from consumer markets, there has been other serious problems plaguing Cisco today, and all that is due to faulty strategy & leadership

1. Leadership failure in consumer space products. Flip was a very successful product, but leadership failed to capitalize on this. Becoming No 1. Video camera in the US market is no easy task, and the Flip team achieved this, yet the top leadership of Cisco was not able to capitalize on it.

2. Linksys & Scientific Atlanta: Both the acquisitions have not been able to capitalize on Cisco Brand name, nor Cisco strengths. These two divisions have not been able to take advantage of Cisco brand name nor Cisco is able to take advantage of these two companies distribution chain. Ideally, I expected Cisco to launch low end enterprise switches to compete with Huawei/ZTE under the Linksys brand name, thus protect Cisco brand from competition. Similarly, Scientific Atlanta could have been leveraged to create IPTV solutions for consumer space - a.k.a. Google TV or Apple TV.

3. Stronger competition for its enterprise switch products, and Cisco does not have a good competitive position to compete with Huawei/ZTE in Asian markets.

4. Cisco no longer has the bragging rights for the highest performing, High end routers & switches: Juniper, Force10 have developed superior products.

5. UCS strategy is a high risk strategy. Cisco entering server space has antagonized its major partners - HP & IBM. HP acquired 3Com and developed ProCurve line of switches to compete headlong with Cisco. IBM tied up with Juniper, Dell acquired Force10, Brocade acquired Foundry. All this implied that Cisco will now face increased market disadvantages when dealing with integrated IT infrastructure deals. The gains in UCS is still not sufficient to offset the losses in networking space

6. Cisco product line has become too fragmented and lacks inter operability. Cisco has several versions of firmware (IOS, IOS-XR, NOS, etc), multiple network management tools that do not work well together, causing major hardship for customer who opt for Cisco only network.

7. Cisco failed to innovate. This probably is the biggest fault. In the heydays Cisco was able to buy innovation with its shares and acquire innovative companies, but in the process, Cisco failed to innovate internally. All the Cisco's new products - were from acquisitions. As acquisitions stopped, the new product innovation tap stopped flowing.

8. Cisco products have become too difficult to manage. Within Cisco, there are several standards, tools and methods for managing their networking devices, causing a major headache for the network administrator to manage all the devices. Cisco today supports SNMP in its Catalyst family of switches, while Nexus uses XML/Webservices. While ISR routers also use Webservices - but ISR webservcies format is not compatible with Nexus. The changing nature of network traffic demands that the network configurations & provisioning must be changed dynamically - and today Cisco tools make it tougher to do so. In short, Cisco has fallen behind the market needs for managing networks.

9. Cisco's focus on large government contracts for services diverted management focus away from products towards services. Cisco built a large services organization - but at the cost of product supremacy. IBM was able to move from hardware to services, and in the process, IBM lost its supremacy in hardware - which was OK, as the gains in services was more than losses in hardware.

10. Organizationally, Cisco has become too big and has built up several layers of bureaucracy and is becoming top heavy. This has made the organization less nibble & agile and cannot move as fast as its competition.