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| Type | Public |
|---|---|
| Traded as | NASDAQ: CSCO Dow Jones Industrial Average Component S&P 500 Component NASDAQ-100 Component |
| Industry | Networking equipment |
| Founded | San Francisco, California, U.S. (1984) |
| Founder(s) | Leonard Bosack Sandy Lerner |
| Headquarters | San Jose, California, U.S. |
| Area served | Worldwide |
| Key people | John Chambers (Chairman & CEO) |
| Products | Networking Device Network Management Cisco IOS and NX-OS Software Interface and Module Optical networking Storage area networks Wireless, Telepresence, VOIP, Security Datacenter List of Cisco Products |
| Revenue |  US$ 46.061 billion (2012) |
| Operating income | US$ 10.065 billion (2012) |
| Net income | US$ 8.041 billion (2012) |
| Total assets | US$ 91.759 billion (2012) |
| Total equity | US$ 51.301 billion (2012) |
| Employees | 72,360 (2013) |
| Subsidiaries | List of acquisitions |
| Website | Cisco.com |
Cisco Systems, Inc. is an American multinational corporation headquartered in San Jose, California, United States, that designs, manufactures, and sells networking equipment. The stock was added to the Dow Jones Industrial Average on June 8, 2009, and is also included in the S&P 500 Index, the Russell 1000 Index, NASDAQ 100 Index and the Russell 1000 Growth Stock Index.
Cisco Systems was founded in December 1984 by two members of Stanford University computer support staff: Leonard Bosack who was in charge of the computer science department's computers, and Sandy Lerner, who managed the Graduate School of Business' computers.
Despite founding Cisco in 1984, Bosack, along with Kirk Lougheed, continued to work at Stanford on Cisco's first product which consisted of exact replicas of Stanford's "Blue Box" router and a stolen copy of the University's multiple-protocol router software, originally written some years earlier at Stanford medical school by William Yeager - a Stanford research engineer - which they adapted into what became the foundation for Cisco IOS. On July 11, 1986, Bosack and Kirk Lougheed were forced to resign from Stanford and the University contemplated filing criminal complaints against Cisco and its founders for the theft of its software, hardware designs and other intellectual properties. In 1987, Stanford licensed the router software and two computer boards to Cisco.
In addition to Bosack, Lerner and Lougheed, Greg Satz, a programmer, and Richard Troiano, who handled sales completed the early Cisco team. The company's first CEO was Bill Graves, who held the position from 1987 to 1988. In 1988, John Morgridge was appointed CEO.
The name "Cisco" was derived from the city name, San Francisco, which is why the company's engineers insisted on using the lower case "cisco" in the early days.
On February 16, 1990, Cisco Systems went public (with a market capitalization of $224 million) and was listed on the NASDAQ stock exchange. On August 28, 1990, Lerner was fired; upon hearing the news, her husband Bosack resigned in protest. The couple walked away from Cisco with $170 million, 70% of which was committed to their own charity.
Although Cisco was not the first company to develop and sell dedicated network nodes, it was one of the first to sell commercially successful routers supporting multiple network protocols. Classical, CPU-based architecture of early Cisco devices coupled with flexibility of operating system IOS allowed for keeping up with evolving technology needs by means of frequent software upgrades. Some popular models of that time (such as Cisco 2500) managed to stay in production for almost a decade virtually unchanged-a rare sight in high-tech industry. Although Cisco was strongly rooted in the enterprise environment, the company was quick to capture the emerging service provider environment, entering SP market with new, high-capacity product lines such as Cisco 7000 and Cisco 7500.
Between 1992 and 1994, Cisco acquired several companies in Ethernet switching, such as Kalpana, Grand Junction, and most notably, Mario Mazzola's Crescendo Communications which together formed the Catalyst business unit. At the time, the company envisioned layer 3 routing and layer 2 (Ethernet, Token Ring) switching as complementary functions of different intelligence and architecture-the former was slow and complex, the latter was fast but simple. This philosophy dominated the company's product lines throughout 1990s.
In 1995, John Morgridge was succeeded by John Chambers.
The phenomenal growth of the Internet in mid-to-late 1990s quickly changed the telecom landscape. As the Internet Protocol (IP) became widely adopted, the importance of multi-protocol routing declined. Nevertheless, Cisco managed to catch the Internet wave, with products ranging from modem access shelves (AS5200) to core GSR routers that quickly became vital to Internet service providers and by 1998 gave Cisco de facto monopoly in this critical segment.
In late March 2000, at the height of the dot-com boom, Cisco became the most valuable company in the world, with a market capitalization of more than US$500 billion. In November 2011, with a market cap of about US$94 billion, it is still one of the most valuable companies.
Meanwhile, the growth of Internet bandwidth requirements kept challenging traditional, software-based packet processing architectures.
The perceived complexity of programming routing functions in silicon, led to formation of several startups determined to find new ways to process IP and MPLS packets entirely in hardware and blur boundaries between routing and switching. One of them, Juniper Networks, shipped their first product in 1999 and by 2000 chipped away about 30% from Cisco SP Market share. Cisco answered the challenge with homegrown ASICs and fast processing cards for GSR routers and Catalyst 6500 switches. In 2004, Cisco also started migration to new high-end hardware CRS-1 and software architecture IOS-XR.
As part of a massive rebranding campaign in 2006, Cisco Systems adopted the shortened name "Cisco" and created "The Human Network" advertising campaign. These efforts were meant to make Cisco a "household" brand-a strategy designed to support the low-end Linksys products and future consumer products (such as Flip Video camera acquired by Cisco in 2009).
On the more traditional business side, Cisco continued to develop its extensive enterprise-focused routing, switching and security portfolio. Quickly growing importance of Ethernet also influenced the company's product lines, prompting the company to morph the successful Catalyst 6500 Ethernet switch into all-purpose Cisco 7600 routing platform. However, limits of IOS and aging Crescendo architecture also forced Cisco to look at merchant silicon in the carrier Ethernet segment. This resulted in a new ASR9000 product family intended to consolidate company's carrier ethernet and subscriber management business around EZChip-based hardware and IOS-XR. Cisco also expanded into new markets by acquisition-one example being a 2009 purchase of mobile specialist Starent Networks that resulted in ASR5000 product line.
Throughout the mid-2000s, Cisco also built a significant presence in India, establishing its Globalization Centre East in Bengaluru for $1 billion, and planning that 20% of Cisco's leaders would be based there.
However, Cisco continued to be challenged by both domestic Alcatel-Lucent, Juniper Networks and overseas competitors Huawei. Due to lower-than-expected profit in 2011, Cisco was forced to reduce annual expenses by $1 billion. The company cut around 3,000 employees with an early-retirement program who accepted buyout and planned to eliminate as many as 10,000 jobs (around 14 percent of the 73,400 total employees before curtailment). During the 2011 analyst call, Cisco's CEO John Chambers called out several competitors by name, including Juniper and HP.
On 24 July 2012, Cisco received approval from the EU to acquire NDS (a TV software developer) for USD 5 billion. This acquisition signaled the end of the "The Human Network" strategy as Cisco found itself backing off from household hardware like Linksys and Flip into the cloud and software solutions.
Cisco launches its first global re-branding campaign for the first time in six years with its "TOMORROW starts here" and "Internet of Everything" advertising campaigns. These efforts were designed to position Cisco for the next ten years into a global leader in connecting the previously unconnected and facilitate the IP address connectivity of people, data, processes and things through cloud computing applications and services.
Cisco products, most notably IP phones and Telepresence, are frequently sighted in movies and TV series. The company itself and its history was featured in the documentary film Something Ventured which premiered in 2011.
Cisco was a 2002–03 recipient of the Ron Brown Award, a U.S. presidential honor to recognize companies "for the exemplary quality of their relationships with employees and communities". Cisco commonly stays on top of Fortune "100 Best Companies to work for", with position No. 20 in 2011.
Cisco acquired a variety of companies to spin products and talent into the company. In 1995–1996 the company completed 11 acquisitions. Several acquisitions, such as Stratacom, were the biggest deals in the industry when they occurred. During the Internet boom in 1999, the company acquired Cerent Corporation, a start-up company located in Petaluma, California, for about US$7 billion. It was the most expensive acquisition made by Cisco to that date, and only the acquisition of Scientific Atlanta has been larger. Several acquired companies have grown into $1Bn+ business units for Cisco, including LAN switching, Enterprise Voice over Internet Protocol (VOIP) platform Webex, and home networking. The latter came as result of Cisco acquiring Linksys in 2003 and in 2010 was supplemented with new product line dubbed Cisco Valet. Cisco announced on March 15, 2012 that it is acquiring NDS Group for $5B. This transaction was completed on July 30, 2012.
In the recent merger deals, Cisco bought Starent Networks (a mobile packet core company) and Moto Development Group, a product design consulting firm that helped develop Cisco's Flip video camera. Also in 2010, Cisco became a key stakeholder in e-Skills Week. In March 2011, Cisco completed the acquisition of privately held network configuration and change management solutions company Pari Networks.
Although many buy-ins (such as Crescendo Networks in 1993, Tandberg in 2010) resulted in acquisition of flagship technology to Cisco, many others have failed-partially or completely. For instance, in 2010 Cisco occupied a meaningful share of the packet-optical market, revenues were still not on par with US$7 billion price tag paid in 1999 for Cerent. Some of acquired technologies (such as Flip from Pure Digital) saw their product lines terminated.
In January 2013, Cisco Systems acquired Israeli software maker Intucell for around $475 million in cash, a move to expand its mobile network management offerings. In the same month, Cisco Systems acquired Cognitive Security, a company focused on Cyber Threat Protection. Cisco also acquired SolveDirect(Cloud Services) in March 2013 and Ubiquisys(Modile Software) in April 2013.
Cisco's current portfolio of products and services is focused upon three market segments-Enterprise and Service Provider, Small Business and the Home. The solutions for each market are segmented into Architectures, which form the basis for how Cisco approaches each market.
Corporate market refers to enterprise networking and service providers.
Small businesses include home businesses and (usually technology-based) startups.
Home user refers to individuals or families who require these kinds of services.
Data
Telephony Products
Servers / Application Appliances
Experimental
Other Products
Operating Systems
VPN/Remote Connectivity
Telephony/VoIP
Other
Cisco became a major provider of Voice over IP to enterprises, and is now moving into the home user market through its acquisitions of Scientific Atlanta and Linksys. Scientific Atlanta provides VoIP equipment to cable service providers such as Time Warner, Cablevision, Rogers Communications, UPC, and others; Linksys has partnered with companies such as Skype, Microsoft and Yahoo! to integrate consumer VoIP services with wireless and cordless phones.
Cisco partners can now offer cloud-based services based on Cisco's virtualized Unified Computing System (UCS). A part of the Cisco Unified Services Delivery Solution that will include hosted versions of Cisco Unified Communications Manager (UCM), Cisco Unified Contact Center, Cisco Unified Mobility, Cisco Unified Presence, Cisco Unity Connection (unified messaging), and Cisco Webex Meeting Center.
The company maintains several Network Emergency Response Vehicles (NERV)s which are staffed by Cisco employees during natural disasters and other public crises. The vehicles are self-contained and provide wired and wireless services including voice and radio interoperability, voice over IP, network based video surveillance and secured high definition video conferencing for leaders and first responders in crisis areas with up to 5 Mbit/s of bandwidth via a 1.8-meter satellite antenna. NERVs are normally stored at Cisco facilities in San Jose, California and Research Triangle Park, North Carolina for strategic deployment in North America and are capable of being fully operational within 15 minutes of arrival, running for 72 hours continuously. The NERV has been deployed to incidents such as the October 2007 California wildfires; hurricanes Gustav, Ike, and Katrina; the 2010 San Bruno gas pipeline explosion, tornado outbreaks in North Carolina and Alabama in 2011; and Hurricane Sandy in 2012. In 2011, Cisco received the Innovation Preparedness award from the American Red Cross, Silicon Valley Chapter for its development and use of these vehicles in disasters.
Cisco Systems also sponsors a line of IT Professional certifications for Cisco products. There are five levels of certification: Entry (CCENT), Associate (CCNA / CCDA), Professional (CCNP / CCDP), Expert (CCIE / CCDE), and recently Architect, as well as eight different paths, Routing & Switching, Design, Network Security, Service Provider, Service Provider Operations, Storage Networking, Voice, and Wireless.
A number of specialist technician, sales and datacenter certifications are also available.
Cisco also provides training for these certifications via a portal called the Cisco Networking Academy. Qualifying schools can become members of the Cisco Networking Academy and then provide CCNA level or other level courses. Cisco Academy Instructors must be CCNA certified to be a CCAI certified instructor.
As a global provider of network solutions, Cisco often finds itself at the frontier of technical education. With over 10,000 partnerships in over 65 countries Cisco Academy program operates in many exotic locations. For example, in March 2013, Cisco announced its interest in Myanmar by investing in two Cisco Networking Academies in Yangon and Mandalay and a channel partner network.
A class action lawsuit filed on April 20, 2001 accused Cisco of making misleading statements that "were relied on by purchasers of Cisco stock" and of insider trading. While Cisco denied all allegations in the suit, on August 18, 2006, Cisco's liability insurers, its directors, and officers paid the plaintiffs US$91.75 million to settle the suit.
On December 11, 2008, the Free Software Foundation filed suit against Cisco regarding Cisco's failure to comply with the GPL and LGPL license models and make the applicable source code publicly available. On May 20, 2009, Cisco settled this lawsuit by complying with FSF licensing terms and making a monetary contribution to the FSF.
Cisco has been criticized for its involvement in censorship in the People's Republic of China. According to author Ethan Gutmann, Cisco and other telecommunications equipment providers supplied the Chinese government with surveillance and Internet infrastructure equipment that is used to block Internet websites and track Chinese online activities. Cisco says that it does not customize or develop specialized or unique filtering capabilities to enable governments to block access to information and that it sells the same equipment in China as it sells worldwide.
Wired News had uncovered a leaked, confidential Cisco power point presentation that details the commercial opportunities of the Golden Shield Project of Internet control. In her article, journalist Sarah Stirland accuses Cisco of marketing its technology "specifically as a tool of repression."
On October 16, 2007, the Brazilian Federal Police and Brazilian Receita Federal (equivalent to the American IRS), under the "Persona Operation", uncovered an alleged tax fraud scheme employed by Cisco Systems Brazil Chief Carlos Roberto Carnevali since 2002 that exempted the company from paying over R$1.5 billion (US$824 million) in taxes.
On December 1, 2008, Multiven filed an antitrust lawsuit against Cisco Systems, Inc. in an effort to open up the network maintenance services marketplace for Cisco equipment, promote competition and ensure consumer choice and value. Multiven's complaint alleges that Cisco harmed Multiven and consumers by bundling and tying bug fixes/patches and updates for its operating system software to its maintenance services (SMARTnet) and through a series of other illegal exclusionary and anticompetitive acts designed to maintain Cisco's alleged monopoly in the network maintenance services market for Cisco networking equipment. Cisco responded by accusing the person who filed the anti-trust suit, British-born Peter Alfred-Adekeye, with hacking and pressured the US government to extradite him from Canada, where he was giving evidence against Cisco in an anti-trust hearing. Canadian Judge Ronald McKinnon, who oversaw the extradition hearing, stated the real reason for the extradition proceedings was because Alfred-Adekeye "dared to take on a multinational giant." He also condemned the US prosecutor for hiding the fact that Alfred-Adekeye was in legal proceedings against Cisco Systems, for stating that Alfred-Adekeye had left the USA in a time period when he had not and a formal request for extradition was not filed against Alfred-Adekeye when he was taken into custody. Judge McKinnon described the information provided by Cisco and the US prosecutor as "full of innuendo, half-truths and falsehoods," adding that "This speaks volumes for Cisco's duplicity" and accused them of "unmitigated gall" in using such a heavy-handed move as an unsupportable arrest and jailing to pressure Alfred-Adekeye to drop or settle his civil antitrust complaint.
Cisco has been reported as using intimidation tactics in several news reports.
Cisco's Linksys E2700, E3500, E4500 devices have been reported to be remotely updated to a firmware version that allows Cisco to monitor their network use.
Notes
Further reading
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