Cisco: Has anything changed?

John Chambers claimed this year would be a turning point for Cisco. But has its annual conference shown a new direction for the legacy company?

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ANALYSIS: Throughout the IT industry we see chief executives (CEO) come and go, be it a choice to "take on new challenges" or thanks to fiddling of their expenses.

However, some become stalwarts of the technology world, their names synonymous with the firm which they lead, like Larry Ellison and Oracle, or Steve Jobs and Apple.

John Chambers is one of those time-honoured CEOs. He has been at the head of Cisco since 1995 and, although he is due to retire in three years, no one can see him just settling for a quiet period before stepping down.

This was no more evident than three months ago when a statement he sent to employees was leaked, in which he sternly laid out the direction the company needed to head in.

"Today we face a simple truth: we have disappointed our investors and we have confused our employees," he wrote. "Bottom line, we have lost some of the credibility that is foundational to Cisco's success and we must earn it back."

"Our market is in transition, and our company is in transition. And the time is right to define this transition for ourselves and our industry. I understand this. It's time for focus."

Some might think it is too soon to ask, but after a week taking over the Mandalay Bay in Las Vegas for the company's Cisco Live conference, surely now is the time for Chambers to prove he meant what he said.

The big announcements

What many in the industry were pleased to see was the focus on the enterprise market. Cisco may at heart be a business to business company, but recent forays into the consumer world seemed to distract its executives from what it does best.

Take Flip, for example - a nifty camera device certainly, which allowed users to capture photos or videos on a pocket-sized device and transfer them straight to their computers via a built-in USB. Cisco only bought the Flip technology in 2009 but less than two years later it announced its demise, not even selling the recently-acquired firm but scrapping it altogether.

The refocus on enterprise may be a wise move, but the argument is still there: Cisco is spreading itself too thin. Rather than just classic networking products, the company has invested heavily in hardware, taking on the might of HP, Dell and even relatively new entrants like Oracle thanks to the latter's acquisition of Sun Microsystems.

Cisco Live showed networking was at the forefront of the company's mind. Day three was all about cloud computing. But rather than multiple updates to its hardware platforms within its Unified Computing System (UCS), it was the network that saw a revamp, with new connector fabrics, I/O to chassis boosting tech and a virtual interface card.

Along with UCS, the other major push was video technologies, which with the likes of Cisco Telepresence, the company has arguably excelled in.

"It was gratifying to see that Cisco customers and analysts are generally supportive of the direction Cisco is headed in," claimed Sheila Jordan, vice president of communication and collaboration at Cisco. "They are pleased to see progress across our product suites as well as our continued offering of more services.

Everything Changes?

Last week seems to have shown a refocusing on what Cisco does best, so where did this change come from and will it make a difference to a company which has felt the brutal force of the economic downturn?

The conclusion seems to be not about Chambers but the dominating presence of Gary Moore, the company's recently installed chief operating officer. It is believed Moore's 30-day assessment of the company after joining, was what instigated Chambers' memo to company employees and ever since taking the role, he has stuck close by the CEO.

Henry Dewing, senior analyst for Forrester, explained to IT Pro the new aim of a "slimmed down" structure for the running of the company and said this was very prominent as a new direction.

"Tactically Cisco is slimming down to three councils enterprise, service provider and emerging markets," he said, with "decision making and accountability placed on the shoulders of product groups and market leads."

Essentially, if a Cisco department now makes a mistake as it seems a fair few did during the recession, somebody will take the blame rather than the "if everyone is responsible, no one is accountable" attitude which has been in play over the past five years.

"In the final Q&A John said that Cisco will continue to innovate organically and inorganically," added Dewing. "With the slimmed down business, they will have more of a rifle shot approach and they cannot afford to cast as wide a net with higher than anticipated growth rates and margin as compared to historical levels."

Dewing claimed to have seen Moore by Chambers' side throughout the entire conference and believed this swing in direction surely had something to do with the new employee.

But Chambers is no puppet and it is his experience that is likely to see the company out the other side of this refocusing period.

"I think [Chambers] has a clear idea where Cisco needs to go and how to get there," concluded Dewing.

"The new reality is that Cisco is a mature market leader, but [Chambers] is also a mature CEO leader. I expect to see him continue to steer the Cisco ship through this turbulent market."

Only time will tell whether Chambers, and arguably Moore, have done enough to bring it back for Cisco. But when a company focuses on what it does best with a man who has been doing it for over 15 years, the odds look good.

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