The 10 Biggest Cisco Stories Of 20114:00 PM EST Tue. Dec. 20, 2011
The Cisco of 2012 will look very different than the Cisco of 2010, which was beset on all sides by supply chain challenges but hadn't yet parted with thousands of employees, hadn't yet re-focused on five key priorities areas instead of 30-50 adjacencies, and hasn't yet looked so vulnerable.
So what happened between 2010 and 2012? Glad you asked: this year was a wild one for Cisco, and here we look at the big events, trends and occurrences that made it so.
Cisco considers its partner services programs some of the best, and with good reason: no other vendor in Cisco's weight class offers partners so many moneymaking opportunities around services with so many types of customers.
In 2011, Cisco made a number of moves directly related to services, including the launch of two major services partner programs -- the Integrated Architectures Specialization and Collaborative Professional Services (CPS) -- adding more resources for VARs looking to take advantage of what, in Cisco's estimation, is a $49 billion addressable market.
Cisco also made available a Rules of Engagement document detailing everything from how Cisco wants partners to package services with solutions bundles to the formal escalation process for partners with Cisco services conflicts. With Cisco VARs on average doing 40 percent of their revenue as services, this is a key growth market for the networking titan.
The Flip was for a while one of the most popular consumer video products out there, but for Cisco, the Flip will be remembered as a symbol of distraction: Cisco getting too involved in trendy, but fractious consumer markets at a time when it really needed to focus on its core networking strengths and high-margin video and data center opportunities.
In a move that was widely anticipated following continued disappointment in Cisco's consumer business unit, Flip was killed off in April, the first of many targeted moves designed to make Cisco slimmer, more focused and more productive. Cisco dumped 550 employees in the process, but by then had already parted ways with former Pure Digital CEO and Cisco SVP Jonathan Kaplan, and seen a decline of 15 percent in its consumer business for the second quarter of its fiscal 2011.
All in all, not the happiest end for Flip maker Pure Digital, which Cisco acquired for $590 million in March 2009.
To hear Cisco's Richard McLeod, Cisco senior director, collaboration sales, WWPO, tell it, collaboration is not only a $42 billion market opportunity for Cisco partners, it's also no less than the "partner investment opportunity of the decade."
Cisco is attacking the market as only it knows how: by going wide and deep on four trends -- mobile, social, visual and virtual. Its products certainly aren't the cheapest by category, but together, they form an architectural play around which VARs can add more products and services, from Cisco Quad to the Android-based Cius tablet. The company made updates to all of it major collaboration lines this year, from video endpoints to virtual desktop infrastructure to app development platforms. "Collaboration is a platform, not an activity. It's about getting info to people, and I think Cisco's message is starting to get to that level," said Steve Reese, vice president, collaboration and secured architectures at Dallas-based Cisco Gold partner INX.
More than 70 percent of all Cisco VARs sell it's Catalyst 6500 switch -- it's most popular product sold -- so whenever a refresh to that Catalyst line happens, it's news. Cisco made updates to the 6500 in line with its Cisco Live conference this summer, and quickly became a magnet for controversy, getting into a spitting contest with HP over perceived strengths and weaknesses in competitive switch offerings.
The real challenge for Cisco VARs, however, isn't in the upgrade so much as Cisco's marketing around Catalyst in relation to its Nexus data center switches -- something Cisco still hasn't fully addressed. "It's confusing to customers," said one longtime Cisco solution provider. "They're hearing 'migrate to Nexus' but then we see these cross-board updates to Catalyst. Where do we direct them to?" One good piece of news for Cisco: its core switching business is bouncing back. According to Infonetics Research, Cisco had a "blowout quarter" in Ethernet switching this fall and has grown revenue 18 percent for the quarter and regained market from HP.
All of the major vendors have variously defined cloud strategies. But Cisco took a big step forward this year in explaining how it wants Cisco VARs to understand cloud computing and how it intends for them to make money off of cloud solutions.
At the Cisco Partner Summit in March, Cisco unveiled a new Cloud Partner Program focused on cloud builders, cloud providers and cloud services resellers -- a set of descriptors that say a lot about how Cisco wants its channel partners to participate in the cloud revolution.
The rest of the year brought more moves directly related to its cloud strategy. In November, Cisco formed a Cloud & Systems Management Technology group to consolidate its Network Management, Automation Services and Service Delivery Platform businesses into one unit. And in December, Cisco debuted CloudVerse, a framework for products and services tied to Cisco's Unified Data Center, Intelligent Network and cloud applications offerings.
Competitors galore are trying to paint Cisco's Unified Computing System (UCS) as little more than a mild data center curiosity, but UCS -- and specifically, Cisco's new found clout as a server vendor -- has only continued to gain traction, and in just two and a half years on the market, has become a dynamite business for Cisco.
Cisco broke into the list of top five server vendors in North America this past spring, and by the end of the year, had passed Dell to become the No. 3 vendor of blade servers, according to researcher IDC's numbers.
Public displays of sabre-rattling against competitors are somewhat rare, and asking Cisco what it thinks of major competitors like HP and Juniper was, in the past, met with a blank stare, a politically correct "worthy adversary"-style comment or a gently dismissive, "We focus on market transitions, not other competitors."
That's gone now. Cisco in 2011 began focusing on its public competitive image and launched targeted marketing campaigns against HP and Juniper, painting the former as pushing a cheap, commodity-based networking story and the latter as an unreliable for customers. "I think that when I view what our competitors have said about Cisco for the last few years, I think our employees, our team and our partner community have been frustrated with the commentary and some of the public attacks we've taken," said Chuck Robbins, Cisco's senior vice president, the Americas, in an interview with CRN in October. "So we're trying to be balanced but crank up the competitive spirit of the business with our employees and our partner community."
More than 30 major executives have left Cisco in calendar 2011, many of them some of Cisco's best-known senior vice presidents and channel-facing team members.
It was probably bound to happen given the consistent turmoil in Cisco's ranks over the past few years, but every week in 2011, it seemed, brought a fresh exit, from former channels marketing boss Luanne Tierney jumping ship to Juniper in January to 19-year Cisco veteran SVP Manny Rivelo exiting for F5 Networks in late October. Cisco's Mount Rushmore -- the cheeky insider's name for the Executive Biographies page on its corporate web site -- sure looks different this year than it did last.
When Cisco confirmed plans to remove $1 billion in operating expenses this year, many Cisco VARs feared that would mean a pull-back in resources devoted to the channel. Not so, it seemed. Rob Lloyd, Cisco executive vice president, worldwide operations, told CRN in July that partners would in fact see more resources -- not fewer.
In the fall, Cisco came to the table with a new strategy called Partner Led, in which Cisco has planned to invest $75 million in channel resources related to marketing, incentive programs, a partner relationship management (PRM) system and access to Cisco's engineering resources. The idea is that solution providers will take the lead on midmarket and SMB customer accounts, and the Partner Led selling motion will mean more Cisco products and services revenue for partners based on how effectively they find opportunities for Cisco. "Foundationally, we are still the same channel company," said Andrew Sage, Cisco vice president, worldwide partner led, to CRN. "We can create some new value for partners in this concept."
At the end of 2011, Cisco is more than 13,000 employees lighter, has restructured and streamlined its sales and engineering units, has promoted and reassigned key executives such as Americas SVP Chuck Robbins into power management roles, and is recovering after several quarters' worth of disappointing earnings and near constant criticism from Wall Street, the channel and customers.
Cisco CEO John Chambers penned an unusually candid 1,500-word memo in April that set the tone for Cisco's 2011. Cisco, said Chambers, had disappointed investors, confused employees and lost credibility in the market. "We have been slow to make decisions, we have had surprises where we should not, and we have lost the accountability that has been a hallmark or of our ability to execute consistently for our customers and our shareholders. That is unacceptable. And it is exactly what we will attack."The net result? Well, for the channel, a happier group of partners who see a simpler Cisco as a better, more productive Cisco.