A study report on CISCO

 

Introduction

Cisco Systems, Inc. is an American multinational corporation 

headquartered in San Jose, California, United States, that designs,manufactures, and sells networking equipment.

History

•       1984 - Computer scientists, Len Bosack and Sandy Lerner, from Stanford University, found Cisco Systems. They invented technology to link their disparate computer systems together. The name "Cisco" was derived from the city name, San Francisco.

•       1985 – first corporate logo is developed and first system the Massbus-Ethernet Interface Subsystem (MEIS), is shipped.

•       1986 - Cisco forever changes the networking communications industry and the Internet by launching its first routing innovation, the AGS multi-protocol router.

•       1987 - The company's first CEO was Bill Graves, who held the position from        1987 to 1988.

•       1988 - John Morgridge joins Cisco as President and CEO.

•       1989 – Revenues reach $27 million.

•       1990 – Revenues reach $69 million. Cisco goes public on February 16, listed as “CSCO” on the NASDAQ.

•       1991 – Revenues reach $183 million. Market capitalization reaches $1 billion.

•       1993 – Revenues reach $714 million. Cisco makes its first acquisition: Crescendo Communications and its 100-Mbps Copper Distributed Data Interface (CDDI) technology. With the acquisition of Crescendo, Mario Mazzola joins the company.

•       1994 – Revenues reach $1.3 billion. Cisco becomes the first major supplier of Multiprotocol internetworking products to be awarded ISO 9001 certification—an internationally recognized endorsement for quality management and quality assurance.

•       1996 – Cisco makes acquisitions with such companies as TGV Software, Inc., Stratacom, Inc., Telebit Corp’s MICA Technologies, Nashoba Networks, Netsys Technologies, Inc., and Metaplex, Inc.

•       1997 - Cisco makes its first appearance in the Fortune 500 at number 332. Revenues reach $6.5 billion. Makes acquisitions with more companies and corporations such as Ardent Communications. Cisco introduces first in a series of products aimed at the voice-over-IP and     fax-over-IP markets; Outlines the first phase of voice/video/data integration strategy.

•       1998 – Revenues reach $8.5 billion. Cisco becomes the first company in history to achieve a market capitalization of $100 billion in just 14 years. Makes acquisitions with such companies as American Internet Corp., and Pipelinks, Inc.

•       1999 - Fortune magazine recognizes Cisco as one of the top 25 best places to work in America and the 8th most admired company in the world. Market capitalization reaches $300 billion. Makes acquisitions with about 20 companies and corporations. Cisco forms partnerships with 10 leading companies to create standards for wireless Internet technology.

•       2000 - Cisco became the world’s most valuable company, in terms of market cap, on March 27, with a high of $82 a share (market cap: $569B), closing at $80.06 (market cap: $555B). Makes acquisitions with about 30 companies and corporations.

•       2003 - Cisco entered home networking market with its acquisition of The Linksys

•       Group. Cisco receives Presidential Award for Corporate Leadership.

•       2006 – Revenues reach $28.5 billion.

 

Key contributors

 

•     John Morgridge –he shaped the Cisco culture from day one, focusing on customer satisfaction, product quality, and frugality.

 

 

•       John T.Chambers – was known for his fair but ultra-competitive  nature. He is a former IBM and Wang Laboratories marketing and sales veteran,fostered Cisco’s strong customer focus and was credited with continuing Cisco’s striking success in the   networking industry.

  

Milestones

• Cisco reached milestones of 100 cisco telepresence customers, deploying units in over 40 countries. 
• Cisco came up with catalyst 6500 network switch in 1999 which was capable of data speed of 400 million packets per second.
• Cisco sold 4 millionth Integrated Service router to coca-cola enterprises. 
• Cisco came up with Nexus1000V switch in May2009 and till 2012, more than 1000 customers are using this speedy device.  

          Vision    

        To Change the way people work, live, play and learn.    

Mission 

To enable people to make power connections – whether in business, education, philanthropy or creativity.

Awards & Recognition  

• #90 Fortune Magazine (January 2012)
• CRN Magazine 2012 channel champions
• J. D. Power & Associates 2012 certification
• Association of Support Professionals (ASP) awards
• M2M value chain award
• Steve American Business award
• Brandon Hall Group Technology excellency award 
• Best Place to Work, for Cisco Portugal, Great Place to Work Institute (March 2012)

Products & Services

Cisco is having wide range of product for Home, Small business and Enterprise and service providers. These products ranging from wireline to wireless.Cisco's products are known for innovation,intelligence and scalability.

Home

                                                   Small Business

          Enterprise and service providers

       

• Blade switches
• Cisco NEXUS family switches (Data center switches) 
• Routers (7200 series)
• Catalyst 6500 series switch (Data center interconnect platform )
• Application networking services
• Wide area application services
• Cisco IP phone 
• Webex application

      Market share

In 2011, Cisco has been the largest revenue sharing leader in Global Data Center Network equipment.

The combined consumer and enterprise worldwide wireless local area network (WLAN) market experienced a fastest growing segment with 27% year-over-year growth in Q1 2012. Enterprise was the fastest growing segment with 27% year-over-year growth in Q1 2012, as a result of increasing usage of wireless devices and Wi-Fis in enterprises. Cisco leads the current WLAN market with more than a 60% market share.

                           The worldwide Ethernet switch market grew 65% market share, owing to industry-wide demand arising from transition to cloud computing and large bandwidth needs arising from video traffic. In the future, growth is expected to be driven by a strong demand of gigabit network switches and emerging economies. Cisco leads the Ethernet switching market with more than a 65% market share. The router market posted a modest year-over-year growth of 2.8% in Q1 2012, compared to a slump in Q4 2011, when it 65% market share.

    Financial Review

Cisco Q1 2012 net revenues rose by 7% with product revenue growing modestly by 5%, and service revenue containing double digit growth momentum at 13%. The Asia-Pacific region experienced robust sales growth of 24%, compared to 5% in EMEA and 3% in Americas regions. Falling public spending on technology infrastructure by governments in Europe and the Americas have slowed down revenue growth from these regions. Cisco derives more than half of its revenues from the Americas region, with EMEA currently accounting for one quarter of total revenues. In Americas, Latin American emerging economies were the driver of growth in revenues. Demand stayed slim in North America on account of declining public sector and enterprise spending. Owing to deteriorating European economic prospects, demand remained slim from western European countries. However, Cisco experienced robust demand from the U.K., Russia and other developing countries in EMEA. Strong demand from APJC was led by China, Japan, India, and Australia.

Nearly 79% of Cisco's revenues are generated by sales of hardware products, and consist of Switching, Routing, Data Center, Video, Collaboration, Security, and other products. In the products portfolio, more than 40% of product revenues came from Switching and Storage products. The 5% growth in switching revenues was driven by sales of new upgraded products. Routing products generated more than 24% of revenues for Cisco, but the revenue from this segment shrank year over year by 0.3% due to rapid declining sales of old generation routers, and slow growth of newly introduced routers. Revenues from collaboration of emerging technologies also remained stagnant due to declining sales in unified communications portfolio and in Cisco Telepresence systems, as a result of weak enterprise and government spending. The video segment experienced strong 12% year-over-year growth in revenues in 1Q2012, due to rapid growth in sales of set-top boxes and video systems. Wireless was the second fastest growing segment with 20% year-over-year increase in revenues, due to strong worldwide demand of wireless products, as consumers shift to wireless from wireline. Security revenues rose by 9% as a result of growth in security network products and refreshed firewall portfolio. Data Centers were the fastest growing segment in Q1 2012 due to strong demand arising because of enterprise-wide shift toward cloud computing systems.

Revenue from services currently constitutes 21% of total Cisco revenues, and it increased by 13% in Q1 2012. Cisco primarily provides technical and advance support services relating to its products and systems. Strong growth in the Asia-Pacific region was because of completion of several large multiyear projects in the region during Q1 2012.

Organizational structure

There were significant change in Cisco's organizational structure in 2001.As per quotes from it's CEO John Chamber "Our new organization structure of counsels,boards,working groups as discussed in the last few calls is operating very effectively. These structures, most important , allow speed, scale,flexibility and rapid replications.We will continue to move into additional market adjacency and are currently at 30".

Currently under CEO Johan Chambers having an operating committee of 15 top executives as mentioned in the figure above.

                      There are 12 councils reporting to the operating committee.Each council has 14 people on average,two of which are either executive vice president or senior vice president.43 Boards report to the council and under boards comes working group which directly report to the board.

    CSR Activities

• Cisco ranked #2 in Cool IT challenge 
• Best company to work for and ranked #42 for world’s most admired company
• “Harvest of Hope, Feed a child programme” in partnership with Akshaya Patra.
• Lifeline India programme

     Observations

• Organization fully aligned with it’s vision and mission
• Having high potential to rise in future
• Has highest market share globally for routers and switches.
• Product are highly guided by technological innovation.
• Excellent business plan and strategy, demanding product line helped cisco to keep at better place in such slowdown economy.

     References

• www.cisco.com 
• www.csr.cisco.com 
• www.newsroom.cisco.com
• www.wikipedia.org 
• www.seekingalpha.com 
• www.networkworld.com