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Cloud enablement

Cisco Starts Spring Cleaning

3:20 PM -- After dabbling in so many "adjacencies," Cisco Systems Inc. (Nasdaq: CSCO) sounds as if it's ready to streamline, based on CEO John Chambers's memo this week. (See Cisco Signals Major Restructuring.)

It's not that surprising, after seeing Cisco get nasty surprises in businesses both old (switches) and new (consumer). I should have seen this coming. (See Consumers Clobber Cisco and Is Cisco Spread Too Thinly?)

Taken from my Wednesday pre-coffee notes, here's a swipe at what Cisco should, might or won't cut.

  • Flip and Umi should both go. It's unclear to me why Cisco has to be the one to put video on consumers' hands. Other companies will do it better, and their traffic will still traverse Cisco routers.

  • Servers could go but won't. Data center virtualization and the cloud are a top priority for Cisco, and it's going to be a huge battle. But do you really need the servers? (See AlcaLu Wants the Data Center, Too, Brocade Responds to Juniper's QFabric, How Q-ute! Juniper's QFabric Rethinks the Data Center and Cisco Dreams of Data Center Unity.)

  • Optical networking. I'm convinced Cisco would have sold this business five or six years ago had the price been right. Cisco's refreshed its optical plans with the CPT, but maybe that should be the company's last stab at this overcrowded market. (See Sources: Cisco Rejects Optical Bids.)

  • Telepresence. Even though Cisco uses this thing a ton, it could pull an Intel Corp. (Nasdaq: INTC) here: Now that the idea is popularized, let other people do the grunt work of continuing it.

  • Videoscape. Pieces might go (Flip), but the larger Videoscape concept has too much of Cisco's future identity tied to it. Videoscape still sounds like a good response to the changing role of the network. It's going to be complicated and burdensome, like moving a chandelier with lots of breakable, free-swinging parts, but I think Cisco will keep at it. (See CES: Cisco Unveils Master Plan for Video.)

  • Councils and boards. Chambers says Cisco has to simplify the way it works, and that sounds like the end of this management structure. Part of the goal was to speed up ideas and create lots of new projects across divisions. In hindsight, it's also a way to build a rudderless ship.

    Analyst Mark Sue of RBC Capital Markets put it well in his Wednesday morning note: "While it sounded good coming from an MBA professor, the real world application of councils, boards, and committees did more to complicate things than anything else at Cisco."

    What would top your to-do list, if you were Chambers? The message board is open.

    — Craig Matsumoto, West Coast Editor, Light Reading

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    Pete Baldwin 12/5/2012 | 5:08:30 PM
    re: Cisco Starts Spring Cleaning

    I wasn't sure where to put this one, as it's a part of Cisco we don't track at all. I don't see why Cisco needs to continue owning it at this point; then again, I don't know that it's hurting the company to have it. Any guesses?

    upand2theright 12/5/2012 | 5:08:27 PM
    re: Cisco Starts Spring Cleaning

    Like Webex.   Good bookend to VoIP handset business.  Keep it.

    upand2theright 12/5/2012 | 5:08:27 PM
    re: Cisco Starts Spring Cleaning

    Killing the councils is a lay-up.  So is the consumer stuff.  Harder calls are service provider.  Not many SA fans at Cisco.  SA revenues are down 30+ percent.  Plus SA set-tops just got tossed out of AT&T.   Other considerations:  Why do mobile futures take a back seat to the video stuff.   Flip those two.           


     


     

    netsalesman 12/5/2012 | 5:08:25 PM
    re: Cisco Starts Spring Cleaning

    My opinion:


    FLIP has to go. No questions. Cisco hasn't *any* consumer DNA. Will require a bloodful acquisition to build it, if it 'll ever be a priority. Until then, recognizing it was an error and stop wasting time and resources in it. Internet traffic will grow anyway without cisco trying to fuel it by being in the endpoint business.


    Linksys:  product cycles and innovation have to radically be faster. Being so adjacent to cisco's  real expertise can even stay. But the division needs a spin. If cisco keeps on treating linksys like it does with the lower end of their enterprise business (the products aimed at SMB, to say) it will fail. In that case better let it go.


    Webex: a "must stay". Webex it's pivotal in the collaboration vision. And it's also a product that still way ahed of the competition on web collaboration, cloud efficiency, and ease of use. If something had to be improved it was the decision to bet big on it earlier on than it 's being done today.


    Optical: Spin off. Not much to add. It's an area where enterprises don't see much value. Either build platform with integration of some sort  (that I don't see likely to happen) or let it go, better.


    Server: If you get to know and use UCS you understand it's not simply a server. Issues here on the cisco messages. Not being aggressive enough left room to competitors to say it's a "Cisco Server", while it's the first significant advancement in computing in the last years. In the cloud world UCS  can only grow and ..hey, in some years defining what's a server and what's networking in the DC will be difficult. It's definitely a stay. But the market must be targeted more efficiently and aggressively.


    Councils and Boards: Council and what? Can you please repeat? Don't need to say more: GO.


    Videoscape: Stay, video is and will be key in the networking space. But must be beefed up quickly to become a pervasive solution/proposition on the field rather   than a generic framework.


     


     


     


     

    Stevery 12/5/2012 | 5:08:25 PM
    re: Cisco Starts Spring Cleaning

    >Webex it's pivotal in the collaboration vision.


    ... but its pricing is stupid.  Would love to know if that portion is turning a honest profit.

    netsalesman 12/5/2012 | 5:08:24 PM
    re: Cisco Starts Spring Cleaning

    Agree with you on that...CIsco needs to start selling it differently. Being a cloud service under every aspect CISCO can even try to innovate on the pricing/business model. Funny, maybe cisco should ask for lessons to good old SP's...business models to sell services are so different than those used to sell boxes (or, which is the same, bottles of coke, or pencils, or microsoft licenses...)

    plainlightview 12/5/2012 | 5:08:22 PM
    re: Cisco Starts Spring Cleaning

    csco has become a empire building place for lot of useless executives, go ask around and see how many people are doing cloud now inside cisco or check up how many pple with no knowledge of datacentre or cloud are now calling themselves cloud solution architects or consulting system engineers, or even CTO, in some of the organisation outside US!

    horse of a different color 12/5/2012 | 5:08:22 PM
    re: Cisco Starts Spring Cleaning

    I worked for Cisco for a bit.  I drank the coolaid.  But I have yet to figure out why they got so spread out in markets that they never should have entered (e.g. Flip).  In a company that was used to margins in the high double digits, why on earth would you want to dabble in single digit margin (if that) commodity products?  Sure, you might get some pull-though sales, but let someone else do that.  That ain't where the profit is.  The bigger and more prolific video gets (read: HD, 3D, movie streaming on XBox's, etc.), the more core you'll need.  And lets not forget the bigger pipes required to deliver all that data.


    I was in the unfortunate position of being in a BU that was...uh...ATM-oriented.  Not a great place to be, as I found out.  But the last couple of years have sure taken an odd direction.  I thought for sure that JC would be in politics by now. 


    I have a strange feeling that those "changes" being described will include some additional "trimming" of the workforce.  That ain't no way to get more profitable.  Hopefully they won't do that, but if they do, I feel for those that will be on the street looking for gainful employment.

    BigBro 12/5/2012 | 5:08:16 PM
    re: Cisco Starts Spring Cleaning

    How many people, across how many BUs, are working on switching these days? There must be *thousands* of people working on each of the Cat 2k/3k, 4500, 6500, and then the Nexus 3k/5k, and 7k. And "Jawbreaker". And...


     


    Anyone know how many people in total Cisco has working on switching? I'd guess it's at least 5,000 people. Seems like a whole lot. But they get away with it, because they're still making a lot of money.

    brtechy 12/5/2012 | 5:08:11 PM
    re: Cisco Starts Spring Cleaning

    Webex is good, not the issue by a long stretch. Agree that selling model today is stupid, could be much bigger. Webex Connect, mail and other deliriums around Webex have to go or already did. Kit it simple, good to learn a big cloud model, good to leverage Telco infra, develop culture of collaboration. It works fine, other options out there are really poor and unreliable (has anybody used netmeeting for real?).


    Lots of other issues the culprit, not this one.

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