i. Photo of Entrepreneur
iii. Brief description of the products/services/business concepts
Cisco's current portfolio of products and services is focused upon three market segments – Enterprise and Service Provider, Small Business and the Home. The solutions for each market are segmented into Architectures, which form the basis for how Cisco approaches each market.
1) Corporate market: Enterprise networking and Service Providers
2) Small businesses
3) Home user
Cisco also attempted to enter consumer market with a line of video recording devices dubbed "Flip". This move did not go well and on April 12, 2011, Cisco announced they were discontinuing all Flip camera production. It will no longer carry the making of Flip cameras.
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ii. Picture of Products
Cisco's current portfolio of products and services is focused upon three market segments – Enterprise and Service Provider, Small Business and the Home. The solutions for each market are segmented into Architectures, which form the basis for how Cisco approaches each market.
1) Corporate market: Enterprise networking and Service Providers
- Borderless networks: for their range of routers, switches, wireless systems, security systems, WAN acceleration, energy and building management systems and media aware networks.
- Collaboration: IP video and phones, TelePresence, HealthPresence, Unified Communications, Call Center systems, Enterprise social networks and Mobile applications.
- Datacenter and Virtualization: Unified Computing, Unified Fabric, Data Centre Switching, Storage Networking and Cloud services.
- IP NGN (Next Generation Networks): High-end routing and switching for fixed and mobile service provider networks, broadcast video contribution/distribution, entitlement and content delivery systems.
2) Small businesses
- Routers and switches.
- Security and surveillance: IP cameras, data and network security solutions etc.
- Voice and conferencing solutions: VOIP phones and gateway-systems, WebEx, video conferencing.
- Wireless: WiFi Access points.
- Network storage systems.
3) Home user
- Linksys product line of access points, switches etc.
- Broadband: cable modems.
- Cisco ūmi – video conferencing.
Cisco also attempted to enter consumer market with a line of video recording devices dubbed "Flip". This move did not go well and on April 12, 2011, Cisco announced they were discontinuing all Flip camera production. It will no longer carry the making of Flip cameras.
iv. A profile of the Entrepreneur and the business
Leonard Bosack (Born in 1952) along with his wife Sandy Lerner, is a co-founder of Cisco Systems, an American-based multinational corporation that designs and sells consumer electronics, networking and communications technology and services. He was awarded the Computer Entrepreneur Award in 2009 for co-founding Cisco Systems and pioneering and advancing the commercialization of routing technology and the profound changes this technology enabled in the computer industry. He is largely responsible for pioneering the widespread commercialization of local area network (LAN) technology to connect geographically disparate computers over a multiprotocol router system, which was unheard of technology at the time. In 1990, Cisco's management fired his wife Sandy Lerner, and Bosack resigned. Bosack is currently the CEO of XKL LLC, a privately funded engineering company which explores and develops optical networks for data communications.
Sandy Lerner (born in 1955) received her bachelor's degree in 1975 in political science from California State University, Chico, a master's degree in econometrics in 1977 from the Claremont Graduate School, and a master's degree in statistics and computer science in 1981 from Stanford University.
In 1984, Sandy Lerner cofounded Cisco Systems with her then boyfriend, and now ex-husband, Len Bosack, while working as Director of Computer Facilities for the Stanford University Graduate School of Business.
It is widely reported that Lerner and Bosack designed the first router so that they could connect the incompatible computer systems of the Stanford offices they were working in so that they could send romantic love letters to each other. However, this was a manufactured corporate legend. In fact, both systems (SU-SCORE and SU-GSB) were TOPS-20 systems. The problem was not that the systems were incompatible (obviously, being the same, they were not), but that the SU-GSB system was not on any network.
It has also been noted that the original router was designed and created by a group of people at Stanford, both students and faculty, rather than Lerner and Bosack alone.
v. A brief introduction of how the business started
Len Bosack and Sandy Lerner, a married couple who worked as computer operations staff members at Stanford University, later joined by Richard Troiano, founded Cisco Systems in 1984. Lerner moved on to direct computer services at Schlumberger, moving full time to Cisco in 1987. For Cisco's first product, Bosack adapted multiple-protocol router software originally written some years before by William Yeager, another Stanford employee who later joined Sun Microsystems. The company's first CEO was Bill Graves, who held the position from 1987 to 1988. In 1988, John Morgridge was appointed CEO.
vi. How the business gained success
On February 16, 1990, the company went public (with a market capitalization of $224 million) and was listed on the Nasdaq stock exchange. On August 28, 1990, Lerner was fired; upon hearing the news, her husband Bosack resigned in protest. The couple walked away from Cisco with $170 million, 70% of which was committed to their own charity.
While Cisco was not the first company to develop and sell a router, it was one of the first to sell commercially successful routers supporting multiple network protocols. Classical, CPU-based architecture of early Cisco devices coupled with flexibility of operating system IOS allowed for keeping up with evolving technology needs by means of frequent software upgrades. Some models (such as Cisco 2500) managed to stay in production for 5–8 years virtually unchanged. Although Cisco products had their roots in the enterprise environment, the company was quick to capitalize in emerging service provider market as well, entering market with successful product lines such as Cisco 7500 and GSR.
Between 1992 and 1994, Cisco has also acquired several companies in Ethernet switching are, most notably Kalpana, Grand Junction and Crescendo Communications together forming Catalyst product line. At the time, the company envisioned layer 3 routing and layer 2 (Ethernet, Token Ring) switching as complementary functions of different intelligence and architecture - the former was slow and complex, the latter was fast but simple. In 1995, John Morgridge was succeeded by John Chambers.
The phenomenal growth of Internet in mid-to late 1990s quickly changed telecom landscape. As the Internet Protocol (IP) became widely adopted, the importance of multi-protocol routing declined. Nevertheless, Cisco managed to capitalize on the Internet wave, with wide range of products that became vital to Internet service providers and by 1998 gave Cisco de-facto monopoly in this critical market segment.
In late March 2000, at the height of the dot-com boom, Cisco became the most valuable company in the world, with a market capitalization of more than US$500 billion. In July 2009, with a market cap of about US$108.03 billion, it is still one of the most valuable companies.
Meanwhile, the growth of Internet bandwidth requirements kept challenging traditional, software-based packet processing architectures. The perceived complexity of programming routing functions in silicon led to formation of several startups determined to find new ways to process IP and MPLS packets entirely in hardware and blur boundaries between routing and switching. One of them, Juniper Networks, shipped their first product in 1999 and by 2000 chipped away about 30% from Cisco SP Market share. Cisco answered the challenge with homegrown ASICs and fast processing cards for GSR routers and Catalyst 6500 switches. In 2004, Cisco also started migration to new high-end hardware CRS-1 and software architecture IOS-XR.
As part of the massive rebranding campaign of 2006, Cisco Systems adopted the new, shortened name "Cisco", a new slogan and logo that was created in collaboration with Joe “Phenom” Finocchiaro and Jerry “The King” Kuyper. The changes were meant to make Cisco a "household" brand - a strategy designed to support the low-end Linksys products and future consumer products (such as Flip Video camera acquired by Cisco in 2009).
As part of the company's overseas strategy, Cisco built substantial presence in India. It has established its Globalization Centre East in Bangalore for $1 billion planning that 20% of Cisco's leaders will be based there. However, Cisco continued to be challenged by both domestic Alcatel-Lucent, Juniper Networks and overseas competitors Huawei.
Due to lower than expected profit in 2011, Cisco was forced to reduce annual expenses by $1 billion. The company cut around 3,000 employees with an early-retirement program who accepted buyout and planned to eliminate as many as 10,000 jobs (around 14 percent of the 73,400 total employees before curtailment). During the 2011 analyst call, Cisco's CEO John Chambers have called several competitors by name, apparently inaugurating a "black PR" campaign.
vii. The ups & downs of the entrepreneur & his/her business
Along with Co-founding Cisco Systems in 1986, Bosack is largely responsible for first pioneering the widespread commercialization of local area network (LAN). He and his fellow staff members at Stanford were able to successfully link the university's 5,000 computers across a 16-square-mile (41 km2) campus area. This contribution is significant in its context, because at that time, technology like that which LAN used was unheard of. Their challenge had been to overcome incompatibility issues, in order to create the first true LAN system.
Leonard Bosack has also held significant technical leadership roles at AT&T Bell Labs, and Digital Equipment Corporation. After earning his Masters Degree in computer science from Stanford University, he became Director of Computer Facilities for the university's Department of Computer Science. He became a key contributor to the emerging network technology driven by the U.S. Department of Defense (ARPAnet), that was the beginning of today's Internet.
Bosack's most recent technological advancements include his creation of new in-line fiber optic amplification systems that are capable of achieving unprecedented data transmission latency speeds of 6.071 milliseconds (fiber plus equipment latency) over 1231 kilometers of fiber, which is roughly the distance between Chicago and New York City. Bosack was inspired by his belief that by leveraging the inherent, but often untapped, physics of fiber optic components, data transmission speeds can be increased with devices that use less power, less space and require less cooling.
The controversy surrounding Bosack and ex-wife Sandy Lerner involves the legitimacy of the claim that the couple invented the multiprotocol router and started Cisco in their living room, using their own credit cards for financing. Many feel that this claim omits many people who helped develop the multiprotocol router, a device which was critical to the early Internet, as well as a battle with Stanford that almost killed Cisco at its conception over charges that Bosack and Lerner used technology that belonged to Stanford when starting their business. The controversy is that while Bosack and Lerner are credited solely, others feel as though it was actually a group effort, and one can't define who did what during the cooperative effort. However, as of December 2001, a Mercury News article cited that a Stanford web site credits only Bosack and Lerner with developing the device that allowed computer networks to communicate intelligently with one another, despite Cisco spokeswoman Jeanette Gibsons claim that it was obviously a group effort.
Led by Chambers, Cisco focused on acquiring start-up companies that were working on emerging technologies with a promising future in the networking business. As Cisco was a highly de-centralized company, managers were empowered to take decisions on acquiring companies.
However, it was made necessary to follow a standard procedure for acquisitions and ensure uniformity in execution all across the company. Cisco employed a three step process. This began with making an evaluation of the target company and convincing its management regarding the benefits of merging together.
Several analysts and media reports expressed doubts over the manner in which the acquisitions were evaluated and the pace at which the deals were closed. Though the company officials boasted of a high success rate for all acquisitions, analysts expressed doubts. Cisco mostly acquired start-ups that were yet to come out with a product. The revenues obtained from those products could not be known until they were fully developed and marketed.
viii. Business Philosophy & Business Strategies used
Cisco’s Business Strategy
Cisco’s business strategy reflected the experience of CEO John Chambers and chairman, John Morgridge. Morgridge, who had been CEO of Cisco from 1988 to 1995, established many of Cisco’s core business principles, including the importance of customer satisfaction, time-to- market, and frugality. Chambers, who took over as CEO in January 1995, had spent most of his career at IBM and Wang, and had watched both companies suffer crippling declines as a result of not adapting quickly enough to changing market conditions. Morgridge, Chambers, and Ed Kozel (then Cisco’s chief technology officer) crafted a strategic plan for Cisco in 1993 which was still being executed in 1998. The plan consisted of four main components:
1) assemble a broad product line in order to provide customers one-stop-shopping for networking solutions,
2) systematize the acquisition process,
3) define industry-wide software standards for networking equipment
4) pick the right strategic partners.
An inherent part of Cisco’s strategy was using acquisitions and partnerships to gain access to new technologies. This strategy was relatively unique in the high-tech world, where many companies viewed looking to the outside for technological help as a sign of weakness. However, Chambers believed that this was just the sort of insular thinking that had led to IBM and Wang’s downfall. He viewed partnership and acquisitions as the most efficient means of offering customers an end-to-end networking solution and developing next-generation-products. For example, Cisco’s partnership with Microsoft enabled the company to develop a new technology for making networks more intelligent in just 18 months. Cisco insiders estimated that it would have taken Cisco four years to develop the product itself without the Microsoft partnership.
Cisco’s Manufacturing Philosophy and Organization
From its beginnings, Cisco was structured as a highly centralized organization. Morgridge believed that too many start-up companies decentralized too quickly, and therefore were unable to benefit from the advantages of scale and control associated with a centralized organization. However, in 1995 Cisco established three separate “lines of business”—Enterprise, Small/Medium Business, and Service Provider—each of which had two to nine separate “business units” reporting to them. Although Cisco had moved to a more decentralized structure, most of the company’s functional areas still remained centralized as of mid-1998, including manufacturing, customer support, finance, information technology, human resources, and sales. Only engineering and marketing were decentralized at the business unit level.
Cisco operated three manufacturing facilities: two in San Jose, “Tasman” and “Walsh,” and a third in South San Jose, “Silver Creek.” Tasman and Walsh were Cisco’ s first manufacturing plants, and they produced most of the company’s enterprise routers and LAN switches. The Silver Creek facility was inherited through the 1996 acquisition of StrataCom, Inc., and it produced most of Cisco’s high-end Internet backbone products for service providers (e.g. Sprint, MCI). In addition to these three owned and operated manufacturing facilities, Cisco utilized “external factories” to outsource production of some of its high volume products.
Cisco’s manufacturing strategy was heavily dependent on outsourcing. The company outsourced many manufacturing activities, such as board stuffing and board testing, to contract manufacturers since these activities required a significant investment in “bricks and mortar,” were less scaleable, and generated lower returns compared to Cisco’s core business. For example, in the case of Cisco’s higher-end, more highly configured products, Cisco would outsource subassembly; bring in completed subsystems, and conduct final testing and assembly in-house, in one of its three manufacturing facilities. At the other end of the spectrum, Cisco utilized external factories to build, test, and ship its less configured, high volume products, such as its low-end routers.
Carl Redfield, senior vice president of manufacturing and logistics at Cisco, explained the strategy: “I want my people focusing on the intellectual portion, establishing the supply base, qualifying new suppliers, and developing better processes, not managing direct labor. We supply the intellect; they supply the labor.”
Tom Fallon, vice president and plant manager at Cisco, added: “If we can make it cheaper, we do. But even then, we look for suppliers who can match our costs. Strategically we want to outsource.”
Approximately 25 percent of Cisco’ s revenue and 50 percent of its unit volume was manufactured and shipped out of external factories. While external factories were not owned by Cisco, and their employees were not Cisco employees, Cisco did supply them with Cisco information systems and test systems to ensure that they met Cisco’s standards for quality and customer satisfaction.
ix. Achievements attained in terms of Market Share, Sales Turnover, Number of Outlets, Recognition, Adoption & Acceptance of Product, etc
Cisco reported fourth quarter net sales of $11.2 billion, net income on a generally accepted accounting principles (GAAP) basis of $1.2 billion or $0.22 per share, and non-GAAP net income of $2.2 billion or $0.40 per share.
Cisco products, most notably IP phones and Telepresence are frequently sighted in movies and TV series[20] The company itself and its history was featured in the documentary film Something Ventured which premiered in 2011.
Cisco was a 2002–03 recipient of the Ron Brown Award, a U.S. presidential honor to recognize companies "for the exemplary quality of their relationships with employees and communities". Cisco commonly stays on top of Fortune "100 Best Companies to work for", with position No. 20 in 2011
According to recent data from Telegeography, revenue from enterprise telephony equipment sales fell by 4 percent during the second quarter of 2011 over the same period last year. Though retaining its leading share of 30 percent of the market, Cisco’s leading position narrowed as rival Avaya gained 3 percentage points to hit 22 percent market share.
Cisco is the largest telecom hardware vendor in the world and competes with firms like Alcatel-Lucent, Siemens, Avaya and Juniper Networks, among others.
x. How the product/company got its name
The name "Cisco" was derived from the city name, San Francisco, which is why the company's engineers insisted on using the lower case "cisco" in the early days.
xi. Unique features about the product/services/business concept that makes it outstanding
Cisco Innovation
- Cisco introduced multiple innovations for its flagship Catalyst® 6500 Series Switches, providing customers with the capability to evolve their network infrastructure for the coming decade's proliferation of connected devices, growth of video traffic, cloud computing business models and increasingly mobile workforces.
- Cisco introduced AppHQ™, an application ecosystem built specifically for Cisco Cius™ that provides new ways to create, manage and rapidly deploy tablet applications in the enterprise.
- Cisco announced the industry's first 60-watt Power over Ethernet capability for one of the most widely deployed enterprise-class switches in the industry, the Catalyst 4500E Switch.
- Cisco introduced new technology to increase the efficiency and security of cloud-based networks so that information can be delivered instantly, with industry-leading security to more people, on more devices, in more locations.
- Cisco introduced a number of new telepresence products and enhancements designed to give customers new ways to simply, quickly and cost effectively scale telepresence throughout their organizations.
Cisco introduced new solutions to help sports and entertainment venues and service providers enhance wireless bandwidth and performance in high-density areas while monetizing the delivery of personalized mobile experiences.
xii. Key Factors contributing to the success of the business
Cisco has established a truly customer-focused culture throughout the organization and not just in the customer-facing departments. Everyone at Cisco is empowered to act on behalf of customers and acknowledge that they all have a role that impacts their behaviors and attitudes. Experts with years of industry knowledge and Internet business solutions experience bring high return on investments to their customers by understanding their perception of cisco products and services and their value. At Cisco, partnership is a key component of strategy for delivering more complete and customized solutions to customers. Through partnerships Cisco can offer complete networked-enabled productivity solutions that drive customer success today and in the future. Cisco encourage their partners to use customer satisfaction knowledge to manage their businesses and improve customer experience. Cisco promotes an environment where customer’s opportunities are constantly analyzed and maximized by implementing business practices and methodologies that increase loyalty, satisfaction and retain customers' business over their lifetimes. Customers drive cisco business strategies to achieving success and excellence in everything they do, and will continue to be the key focus for developing products and services that accelerate their capability to prosper in the Internet business.