(The Human Network)
Cisco Systems, Inc. is Multinational Corporation with over 65,000 employees.
They are currently headquartered in San Jose, California and as of this year have
revenue of $36.10 billion. Len Bosack and Sandy Lerner, who worked on the staff at
Stanford University in the computer operations department, were the founders of Cisco
Systems in 1984. Len and Sandy first realized that there had to be a change in
technology when they were running wires between buildings at the Stanford campus,
linking first with bridges, and then with routers. The next year the company
headquartered in their hometown of Atherton, California. Also during that year they
came up with the logo of the company, which resembled the Golden Gate Bridge, hence
the name “Cisco” from San Francisco. Talk about a unique concept dealing with nodes.
Imagine the brand identity generated by hearing San Francisco and seeing the Golden
Cisco Systems is in the business of designing and selling of networking and
communications technology and services. Although, not the first of its kind in 1984 to
sell create and distribute a router, they changed the industry by being the first to
manufacture and sell routers sustaining multiple network protocols. As we have
discussed in class, competition can spring up from places that you least expect. In
March of 1986 Cisco forever changed the game of networking communications industry
and the internet by shipping its first routing innovation, the AGS (Advanced Gateway
Server), to the University of Utah. In 1987 Cisco got the attention of Sequoia Capital a
company that ended up investing $2 million dollars of venture funds. Also, in the same
year they started producing a multiport communication interface in which more than one
Ethernet and serial port that could run up to T1 speeds, speeds that the industry had
never been exposed to. This high speed network interface could do bridging and
routing at the same time. While the MCI’s were starting to be shipped and the company
continued to grow, John Morgridge was acquired as CEO and President of Cisco.
Although they only had three products to their name and 111 employees, Cisco
reported fiscal year revenue for 1989 of $27 million. Further, they took on the idea of
developing a system that would enable a higher capacity, which resulted in the first high
speed technology interface.
Cisco decided to go public in February of 1990 on the NASDAQ with a split-
adjusted price of about 6 cents. The company now has a market cap of $139 billion.
This is when they broaden their product line by adding a more compact Gateway
Server, which is a low-end access router. In 1991 Cisco opens it first commercial offices
in California and in France. Also that year in March, was the first time that their stock
had split resulting in a market cap of $1 billion. That next year they open doors in
Canada and Japan. At this point they are penetrating many markets and are becoming
a world leader in routing systems. Cisco Systems then unveils a three-phase program,
which merges an A.T.M. technology with the routing systems allowing for the exchange
of information in a variety of formats, including data, voice, video, and imaging. In 1994
Cisco’ internet web site is officially launched with 10,000 registered users between June
and December. From there they continuously come out with new routers and internet
gateway software that connects desktop users with the internet.
In 1997 Cisco had over 64 national and international locations with $6.5 billion in
annual revenue. This year they reached their 10,000th employee and had acquired
numerous companies. They also launched a Network Academy program for high school
and college students to learn how to, install, and maintain computer networks. With the
public use of the internet they produce firewalls and announced the industry’s first
enterprise-wide security initiative. Cisco then dipped their hand in the Digital Subscriber
Line (DSL) market. Changing the game once again they come out with products aimed
at the Voice-over-IP and fax-over-IP markets as well as the Universal Broadband
Router, which was the first router and cable modem to offer new, differentiated services
including high-speed internet access, streaming video, secure data services, and virtual
In 1998 Cisco became the first company in history to achieve a market cap of
$100 billion in just 14 years. Also, in 1998 they were the first to introduce the cable
modem for small office, home office, and telecommuting environments. That next year
they targeted the internet video market by expanding its offerings for IP-based
videoconferencing and streaming. They also delivered ten new IP technologies
including second-generation IP phones and makes motion picture history with the first
ever internet transported and digitally screened movie.
Between 2001 and 2002 they introduce the analog telephone adapter, which
turns a traditional telephone into one capable of making voice over IP, and Cisco
created a wireless IP phone. They also were a part of the industry’s first transatlantic
transmission of high definition television over IP. In 2003 there was a ground breaking
technology in which Cisco played a part in. This technology was the telerobotic-assisted
surgery procedure. This is a three armed robot that directly translated a surgeon’s
natural hand, wrist and finger movements, allowing the surgeon to operate on a patient
hundreds of miles away.
The economic crash hit Silicon Valley as hard if not harder than anywhere else.
During this economic downturn, while their competition is just trying to stay afloat, Cisco
Systems is being more aggressive than ever before. The company is trying to create a
presence in all parts of the Web’s foundation. They have become industry leaders in
networking hardware, network management software, and routing. In 2009 the
company estimates that two-thirds of the world’s digital data will pass through Cisco
equipment. Cisco’s products are mostly products that the everyday person will never
see. These products include routers and switches that direct internet traffic. The
company doesn’t focus on selling their hardware; they sell a dream of the world made
better by Cisco’s hardware a world in which the internet improves people’s lives.
Over time information technology companies have tried to gain brand identity by
humanizing their brands and most of them have failed. In 2006 Cisco Systems
succeeded at this task by daringly branding themselves as “the human network.” They
have since taken their old, unoriginal logo and replaced it with contemporary, stylized,
more attractive logo. The human network is focused on the companies “telepresence”
technology. This technology was not only created to improve businesses around the
world but to change ways that everyday people communicate with others around the
world. Cisco describes the human network as follows, “Welcome to a place where
we’re all connected. On the human network, anything is possible. Explore the ways
Cisco technology is transforming everything from your sports teams to your living room.
And see why when we’re together, we’re more powerful than we could ever be apart.
Welcome to the human network.” Cisco was once known only to IT professionals and
network manager. With the human network ads being run on television and magazines
the company is positioning itself directly to the consumer. Through their television ads
Cisco is trying to bring the idea of networking to a personal level. As technology that
was primarily used in business offices becomes a bigger part of our everyday lives,
Cisco has made its brand identity more powerful and has placed itself in the perfect
position to gain the business of everyday consumers. The human network isn’t the only
way Cisco is creating brand identity. They have also been acquiring other networking
brands which already have strength with consumers and small business networks. The
three most notable acquisitions are Linksys, Scientific Atlanta, and WebEx. In 2008
there were reports that Cisco was planning on getting rid of the Linksys and Scientific
Atlanta brand names. At Cisco the focus isn’t on the things they sell, it’s on the people
who use them.
Innovation is the cornerstone of Cisco’s business culture. They try to stay at the
forefront of the industry by having all of the company’s employees contribute new ideas.
Cisco’s innovation model is to collaborate with the company, partner with other
companies, buy smaller companies that compete in emerging markets, and build those
companies to the point where they are leading the market. In terms of market share,
Cisco is either 1st or 2nd in every market they are in. Innovation is of upmost importance
at Cisco, not only through their technology and products but through their business
processes and models. Cisco’s successful integration of emerging networking
technologies like voice, security, and storage puts the company several years ahead of
the other companies competing in their industry.
Cisco Systems gains its competitive edge not only through research and
development but by being involved in one of the most successful merger-and-
acquisition programs. Cisco brings on smaller companies that compete in different
industries related to computer and internet technology. By doing this the company
reduces competition from small companies and broadens their ability to explore new
market potential, helping them stay ahead of the competition. One of the most recent
acquisitions was of the company Pure Digital, the maker of the flip video camera. This
acquisition is key to Cisco’s strategy to capture the consumer market transition to visual
networking, which will be difficult task with Apple as its biggest competitor. Gaining the
confidence of their customers is another focus of Cisco. The company does this by
expressing their vision and strategy, product architecture, and service and support.
With the confidence of their customers Cisco is uniquely positioned to win their
customers hearts, minds, and capital investment.
With most of their competition focusing on the “now” Cisco Systems is focusing
on potential markets in the future. The company has recently announced that it will be
pursuing 30 new markets in 2009 including sports, smart grid technologies, and cloud
computing all at the same time. Exploring multiple new markets simultaneously instead
of focusing on just a couple will give them the capability to stay ahead of competition
and keep the industry following their lead. Cisco doesn’t change its long term strategies
based upon short term changes in the economy. Focusing on the short run only gives
the competition a chance to take over the industry.
In the sports industry Cisco is attempting to connect the power of technology to
create the ultimate fan experience. They are developing ways for customers to buy
tickets online and download them to a smart phone. Once you arrive to the stadium
gate there will be a technology that will be able to scan your ticket. But that’s not it, they
are also developing kiosks that will scan your ticket and will have the ability to tell you if
there is better seat available and will give the customer the option to upgrade their ticket
even after they have entered the stadium.
With energy consumption becoming a global concern, Cisco is taking advantage
of the opportunity by developing highly advanced “Smart Grid” technologies. These
technologies will help utility companies and their customers manage power supplies and
energy consumption more efficiently. The company’s experience in developing
networks based on industry standards has given them the upper hand when it comes to
this emerging technology.
Cisco Systems CEO, John Chambers, has expressed how he never likes to
waste a good crisis. He believes the best way to outpace his competition is during an
economic crisis. Building relationships with customers is a key priority in their business
model and during an economic downturn is one of the best times to do so. Cisco has
taken advantage economic downturns in the past, each time emerging with more
market share and engaged in more markets. The company is built around a vision that
looks 5 to 10 years in the future. Cisco CEO, John Chambers, has stated that he
spends almost no time worrying about the next quarter or next year but where the
company needs to be in the next 2, 3, or 5 years. The success of the company is
largely due to its innovative research and development, standout marketing, and
Cisco is maintaining growth and outperforming its competitors in many different
ways. By exploring potential in the emerging markets of the world Cisco is opening
many more doors as well as bringing on much more competition. In order to stay in
front of that competition the company is focusing on “country transformation.” They try
to gain international customers by working with the governments of foreign nations and
focusing their individual and unique issues. Gaining the support of foreign governments
ultimately results in sales to the companies that are building the technology
infrastructure in that nation, which makes it clear that Cisco Systems knows when and
why companies buy. Winning over the government is neither an easy nor a cheap task.
In order to succeed in this task they try to get involved in different charities in these
countries, hire well connected people within the foreign governments, and eventually
creates thousands of jobs which influence the country’s economy.