Cisco Systems, Inc.
Cisco Systems Inc. is one of the world’s leading American Technology companies, headquartered in San Jose, California. Cisco is best known for its computer networking products that sold its products mostly to other businesses, Cisco Systems Inc. did not become a household name, but in the second decade of the 21st century it was one of the largest corporations in the USA.
Cisco Systems Inc. was founded in 1984 by married couple Leonard Bosack and Sandra Lerner, who had met while students at Stanford University. After graduating in 1981, they worked at the school, directing the computer facilities of two different departments. Bosack found a way to link their respective computer networks using technology that other Stanford employees had devised in the 1970’s. He and Lerner came to recognize that router technology, as it was called, could be adapted very profitably for large-scale use outside the university. In December 1984 the two founded Cisco Systems taking the company name from the city of San Francisco.
In 1985 Cisco Systems Inc. sold its first product, a network interface card for Digital Equipment Corporation’s computers. Its first big success, a router that served multiple network protocols, came the following year. In need of cash for expansion, the founders turned to a venture capital firm, Sequoia Capital. Sequoia took effective control of the company in late 1987 and installed John Morgridge as president and CEO in 1988. He managed ably but did not get along with the founders. In 1990, soon after Cisco sold its first shares of stock to the public, Lerner was ousted from the company and Bosack subsequently quit.
Cisco Systems Inc. did not acquire a company during the first seven years of its existence but grew rapidly in the early 1990’s. The company introduced the improved 7000-model router in 1993 and that same year it began acquiring other companies to spin products and talent into the company.
On September 24th 1993, Cisco made its first purchase by acquiring LAN Switching Company, Crescendo Communications. Following the first Cisco takeover purchase, acquisitions have constituted 50% of the company’s business activity.
In 1994 the company relocated its headquarters from Menlo Park, California, to San Jose, and the following year John T. Chambers replaced Morgridge as CEO. Chambers continued to pursue the strategy of growth by acquisition.
In 1998 Cisco Systems Inc. bought Selsius Systems, a company with expertise in Internet telephony that helped Cisco take a dominant position in VoIP technology.
In an attempt to expand the company’s consumer product base, Cisco bought over brand Linksys in 2003 for 500 million USD. Linksys was, since its inception in 1988, mainly focused on networking hardware for home and small businesses. The brand was more notably known for its wide range of broadband and wireless routers. However, in 2007, Cisco sold Linksys to competitor Belkin since the business didn’t bring enough revenue and therefor Cisco wanted to leave the Consumer Networking market.
In 2005 Cisco made its largest acquisition by purchasing the cable television, telecommunications and broadband equipment manufacturing business of Georgia-based Scientific Atlanta that was founded in 1951 by a group of engineers from the Georgia Institute of Technology. The deal was valued a 6.9 billion USD.
The combination of Scientific-Atlanta’s set-top boxes with router products from Cisco’s Linksys group offered Cisco the video component of what the company is calling a quad play – data, video, mobility and voice convergence. Scientific Atlanta became a division within Cisco’s routing and service provider group and was operating as a separate business.
In 2006 Cisco introduced TelePresence, an elaboration of videoconferencing that is intended to allow people in different locations to interact as if they were in the same place. Cisco’s networking expertise made it a leading provider of products for the Internet of Things, a concept often credited as having been named at Cisco.
The majority of companies acquired by Cisco were based in the USA and a total of 149 companies have been acquired as of March 2011. Most of the companies acquired by Cisco are related to computer networking, with several LAN switching and VoIP companies included in the list of acquisitions.
Cisco continued to show just how serious it was about videoconferencing by acquiring Norwegian based Tandberg in October 2009, The acquisition was valued for almost 3.4 billion USD. In February 2011, Tandberg was officially rebranded to Cisco, however the Tandberg name continued to be extensively used (as of mid 2011).
Note: Tandberg Television, originally with headquarters in Lillestrom, Norway, was formed in 1979 when the original Tandberg Company was split into Tandberg, Tandberg Data and Tandberg Television that was acquired by Ericsson in 2008.
On November 21st, 2015, Cisco completed the sale of its Scientific Atlanta’s Connected Devices Business Unit (CDBU), to French multinational Technicolor SA (formerly Thomson SARL and Thomson Multimedia). This business was comprised primarily by customer premises equipment (CPE) related hardware and software that had originated at Scientific Atlanta, including set top boxes, cable gateways/modems, CableCard devices, digital transport adapters, wireless video access points, network extenders, accessories and eleven software products related to these offerings
The sale of Scientific Atlanta business Unit marked a stunning financial exit for Cisco after a decade of trying to build the business. The divestiture of the CDBU is all part of a continuing re-alignment of Cisco to focus on it core areas of growth. Cisco has been exiting multiple businesses in recent years as it doubles down on its areas of core competence.
In the following years the company increasingly changed its emphasis from hardware to software and in December 2017, John T. Chambers stepped down as Cisco’s CEO and was replaced by Chuck Robbins, former senior VP of worldwide Sales & Operations and 17-year Cisco veteran.
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www.enterprisenetworkingplanet.com edition July 23rd, 2015
www.networkworld.com edition November 18th, 2005
www.businesswire.com edition February 27th, 2006
www.nytimes.com edition October 1st, 2009
www.techcrunch.com edition January 25th, 2013
www.wsj.com edition January 24th, 2013