Cisco who have battled in the consumer market for a long time, is now struggling in the enterprise market with the company’s shares sliding 30% recently. Speculation is also emerging that the company may rethink their consumer strategy with a view to getting out of some categories to concentrate on network gear for the home.
Last week in Melbourne, Cisco Australia tried to pump up the troops with their Cisco Live! conference, but what they failed to reveal is that Cisco is not the “darling” IT company anymore.
Last night Cisco Systems CEO, John Chambers, told employees in a memo that the one-time technology bellwether has lost its way – and warned that big changes are on the way.
Chambers, said in an internal e-mail that the networking giant had been slow to make decisions, fallen down on execution and lacked discipline in aggressive expansion.
In the consumer market Cisco is trying to get consumers to fork out over $350 for a home video system and pay a monthly subscription when a good Skype camera costs as low as $49 for a similar service with no monthly subscription fees.
In a 1490-word e-mail, he warned staff to prepare for a number of changes in the next few weeks and the coming fiscal year, which, for Cisco, starts in August.
The long-serving Chambers, who has apologised repeatedly to shareholders for missing Wall Street’s targets, said the company had let investors down and confused its own employees.
“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 of our ability to execute consistently for our customers and our shareholders,” Chambers wrote. “That is unacceptable. And it is exactly what we will attack.”
Cisco’s last two quarterly results disappointed the market. In November, the company announced sales growth would be lower than analysts expected. In February, it warned of dwindling public spending and weaker margins from tough competition.
The shares have lost a third of their value over the past 52 weeks.
In February, Cisco posted an 18% drop in quarterly profit and a 6% sales increase, amid growing pressures in its core network-switching business from rivals Hewlett-Packard. and Juniper Networks.
Earlier this year Cisco lost consumer-products head Jonathan Kaplan and chief marketing officer Susan Bostrom.
Cisco’s stock has slid more than 30% over the past 12 months, even as the Nasdaq Composite Index has risen 15%.
Locally the Company is set to expand their home networking products in a head on fight with D Link, Negear and Belkin.
Cisco says the market for home wireless routers, especially 802.11n gear, is ripe for expansion especially as several TV Companies are launching new IP enabled TV’s in Australia. Locally the Company believes that they can capatalise on the demand for Wireless by delivering network products for the home that interface with a new generation of devices.
Their new E-Series routers include an entry-level E1200 (replacing the E1000), the E1500, the $100 E2500 (simultaneous dual-band) and the E3200 (home entertainment-driven).
Missing from their new offering is IPv6 compatibility.
Cisco said that a free firmware upgrade will be available by the last quarter to fix the problem
Cisco had promised that IPv6 would ship in April for the high-end E4200 that launched in January, and the company reiterated that promise to IDG publication Network World last week in the USA.