Cisco’s moment of truth

Cisco achieved a milestone in its most recent fiscal quarter, one with profound implications for the future of the company: Cisco made more money for new products and services that are made of routers and switches.

Naturally, the networking giant has long known this day would come, and has been more than ready for it. Cisco has been to embrace change, actively pursuing for years. Every major movement toward what has been called “adjacent markets”, to the products that some refer to the traditional logic of Cisco, the main markets, but are actually new territory for Cisco.

That is the logic that has come to this router provider to the neck in the sale of everything from set-top boxes for blade servers to video cameras. In fact, the company has its hands on some 30 “adjacent markets” at this time.

But this strategy is creating difficulties for Cisco even when it creates opportunities. In the data center, partners like HP and IBM are bitter rivals. In retail stores, Cisco is still trying to understand what consumers will buy – and at what price. Meanwhile, in your backyard router, Cisco is losing market share to companies with a sharper focus.

In general, the scattergun approach to obtain in 30 new markets – a war in dozens of different fronts – is starting to take its toll. Analysts in the deep history of Jim Duffy this week (page 1) argue that Cisco has been too aggressive, trying to maintain a growth rate that can not be more realistic one company $ 40 billion. In fact, the story also reports that Cisco is quiet slow its growth targets.

Certainly, this is the way Cisco had to take. long-standing determination of the company to be the first or second in every market we compete in the services well. When they had mastered their core markets, Cisco needed new worlds to conquer, but found them and went after them.

But now Cisco is an interesting point in time. There is a young company again, and can not move like a young, no matter how many new firms to absorb. If Cisco were a person, you could say that is graduating from college. Has been the big man on campus. It has done a lot of experimentation. But now is the time for Cisco to find what you want to be when I grow up.