Cisco's ups and downs

Author:Fresh jujube classroom Time:2022.07.14

In 1973, a young man named Leonard Bosack successfully graduated from the University of Pennsylvania.

Subsequently, he joined the famous computer manufacturing company at the time, DEC (Digital Equipment Company) and became a researcher.

Six years later, in 1979, Popuk intends to improve his education. So he came to Stanford University to study a master's degree in computer science.

During this period, because of his outstanding capabilities and good quality, Posak was hired by Stanford University as the director of computer facilities at the Department of Computer Science at the school. He also participated in an important project promoted by the US Department of Defense, Arpnet.

Yes, it is the "Apa.com", known as the source of modern Internet.

In addition to his career, Posac's love also ushered in harvest. He met Sandy Lerner, the laboratory director of Stanford University Business School. The two fell in love and soon settled in 1980.

Posak

After entering the 1980s, the Losak's life ushered in a major change.

At that time, computer network technology had achieved good development, and many manufacturers developed their own local area network work agreements. However, these agreements are not connected with each other.

Take Stanford University as an example. Different hospitals inside the school use different network protocols. The computer department where Leonard Posac is located is the Ethernet agreement from Xerox Parc Labs, while the business school where Sandy Lena is located is DEC's proprietary company protocol.

The well -known "printer company" is actually the birthplace of many black technology including mouse, Ethernet, GUI, icon, graphic text editor

The isolated network protocol has inspired Leonard Posak and Santy Lena -why can't we invented a device and connect different networks?

So they found Andy Bechtolsheim, a doctoral student in Stanford, and William Yeager, who worked at Stanford University School of Medicine, began to study this idea.

Andy Bottorsheim

Soon after, Andy Bertolsheim designed a UNIX -based network workstation. This online workstation called "Blue Box" is developed by Posac and others, and the software is written by William Ig. It can identify different transmission protocols and complete the interconnection of different networks.

The Posac and his wife soon installed this "blue box" device on the campus network of Stanford University, establishing a huge network connecting a large number of computers.

The success of the Stanford Campus Network has attracted the attention of many universities and research institutions. They put forward the demand for purchase, hoping to use the "blue box" to open up their internal networks.

After aware of the huge commercial value of the "Blue Box", the Posac and his wife began to consider commercialization.

It is worth mentioning that in addition to the "blue box", Andy Betorsheim also designed a small graphic workstation. In 1982, he and several classmates left the school and founded the famous Sun Company later.

Several founders of Sun company, the middle red clothes are Andy

Many people do not know that the name of the company is actually the first letters of the Stanford University Network.

The Posac couple also hopes to sell the "blue box" through the company. However, when they applied to Stanford University, they were rejected by the school and believed that "the time was not mature."

In desperation, the Posac and his wife decided to secretly set up a company to carry out the R & D and sales business of "Blue Box".

█ 1984-1987: The company started, staggering starting

In 1984, Cisco System (Inc.) was officially established in San Jose, San Francisco Bay Area, California, USA.

As everyone knows, the company name "Cisco" is taken from the last five letters of San Francisco, an English name of San Francisco.

The Posak couple likes the city of San Francisco very much, and originally planned to take the city name as a company name. However, U.S. law is prohibited from doing so. Therefore, they can only use the last five letters of the city. In order to express their "dissatisfaction", they also insisted on lowering the beginning of the letter.

In addition to the company's name, they also use San Francisco's famous Golden Gate Bridge as the company LOGO, which represents connection and communication.

Cisco logo

After the company was founded, the Posak couple did not leave Stanford University, but started part -time entrepreneurship.

They found Kirk Lougheed from the Department of Electronic Engineering to cooperate with the development of a "blue box" replica. The software of the blue box gradually became the prototype of the Cisco iOS operating system.

In 1985, Cisco sold its first product, a network interface card for DEC computers.

In 1986, Cisco officially launched its first multi -protocol router, which is also the world's first commercial route -AGS (Advanced Gateway Server, advanced gateway server). The first customer of AGS was the State University of Utah. AGS appearance and internal structure

I have to say that the timing of AGS is perfect.

In 1983, the US Natural Science Foundation (NSF) invested in the construction of a wide area network connecting various universities and several supercomputers in the United States -NSFNET (also the prototype of the Internet today). At that time, the purpose of the construction of this network was to allow scientific researchers to use supercomputers remotely.

In 1985, NSFNET began to dock with commercial networks. Because the networks of various universities and companies use different network protocols and equipment, they have a strong demand for multi -protocol routers.

AGS perfectly cater to these needs. Therefore, orders are constantly steadily.

AGS derivative model

However, just when Cisco has just improved, Stanford University filed a criminal lawsuit against them. Stanford University believes that Cisco's products are "duty inventions" and the school has intellectual property rights.

After an emergency consultation, Stanford University finally decided to open the Internet, reducing claims on Posaci and Cisco, and did not pursue it anymore.

It seems that the school's decision is wise. If Cisco was stifled at the time, there would be no later network equipment hegemon. The development of human network communication technology will also be affected.

In July 1986, the Posaci and Kelk Lawshids officially resigned from Stanford University and began a full -time career career.

In April 1987, Cisco officially paid $ 19,300 in cash to Stanford University and agreed to pay a copyright fee of $ 150,000 in the future (and provided the corresponding product discounts). The lawsuit between the two sides was over, and Cisco's first crisis was also announced.

Later, in order to thank Stanford University for "not killing the grace", the Posaci couple contributed a huge amount of donations to the school, and the number far exceeded the amount of claims at that time.

█1988-1994: Looking for investment, embarking on the formal

After full -time operations, the Posak couple worked hard to promote the business development of Cisco.

At the time, their situation was not optimistic. They set up the company in their parents' homes. In order to cope with the capital needs required by the company's operations, they applied for a large number of credit cards and paid the fee with borrowing. Because there is no money to advertise, all their new customers come from the promotion and introduction of old customers.

After realizing the restrictions brought by the company's development, they thought of venture capital.

So they came to Sandhill Road in Silicon Valley to carry out fundraising operations. This is the base of major venture capital companies in the world, with hundreds of venture capital companies.

After experiencing the rejection of 76 venture capital companies, the Posak couple finally reached a cooperation intention with the famous Sequoia Capital.

Sequoia Capital

Having said that, Cisco's technology is so popular. Why do many venture capital companies reject them?

Mainly because of the personality of the Posaci couple.

Donald Valentine, the founder of Sequoia Capital Legend, has participated in early investment from Apple, 3COM, Oracle and other companies. He recalled this way for the Cisco and Posac: he remembered:

"Entrepreneurs are the key factor affecting the success or failure of the career ... The Posak couple is a great scientific research expert, but they are a very poor business operator ..."

Donna Van Lunding

The Posak couple worked in colleges and universities for a long time, and they are good at technology, but they lack the management experience of modern enterprises. Their business style is very extensive, neither marketing strategies nor market goals.

Fan Lunding promised to invest in Cisco 2.5 million, but proposed the prerequisite:

The Posac and his wife must give up Cisco's business dominance; Van Lunding himself serves as the chairman of the company; hires external CEOs to re -establish a professional operating team.

The Posak couple is not interested in the company's management affairs, and they urgently need funds to maintain the company's operation. As a result, they agreed to Van Lunding's conditions, abandoned most of the equity and business management rights, and reserved only 35%of the equity.

In 1988, Van Lunding hired John Morgridge, the president of Grid System, who had served as Grid System, as CEO of Cisco.

John Mogliqi

After handing over the power, Leonard Bosak served as the company's CTO, while Sandy Lena was the vice president of the customer service department.

Santy Lena is a very irritable woman. She was extremely dissatisfied with Van Lunding and Mogri. She believes: "They are just a pair of businessmen, I just want to use Siko to make money to make money ... My philosophy and them are different."

In order to express her dissatisfaction, she often quarrels with Mogli in the company and constantly intervene in the business of various departments to become a headache.

In fact, Mogli's management company's ability is far stronger than the Posac couple. Under his leadership, the operation of Cisco has improved rapidly, and sales performance has grown rapidly.

In 1989, Cisco's performance increased by nearly 20 times to $ 28 million. On February 16, 1990, Cisco was officially listed on Nasdaq with a market value of $ 224 million.

This year, they also replaced the new logo (the beginning of the letter C, still a lowercase).

Soon after, on August 28, 1990, the board of directors of Cisco was unbearable to Saty Lerner and fired it.

After learning the news, Leonard Bosak announced his resignation to protest. In the end, the two sold their stocks and took a $ 170 million cash to leave the company they founded. (It is sighing that it didn't take long for the two to go to the ending of the divorce.)

█ 1995-2001: The strong man appeared and went to the peak

In 1995, Mogri, 62, decided to retreat.

His term is very successful. While he was the CEO, Cisco transformed from a company with an annual income of only $ 5 million to a $ 1 billion listed company giant. The number of companies has also increased from 34 to 2260.

There is no doubt that Cisco has completed the first transformation.

After Mogli's departure, Cisco ushered in a more legendary leader -John Chamber, which was once known as "the strongest CEO on the surface".

John Chambers

Chamber is a managing genius. He joined Cisco in 1991 as a senior director of the sales department. Prior to this, he worked at IBM and Wang An Computer Computer, and had rich experience in corporate management and market expansion.

Before taking over the CEO, Chambers was the senior deputy president of Cisco America, which was three years old, and has jumped into the company's second leader and is responsible for the company's main business.

In January 1995, Chambers took over Mogri's business power and officially became the new CEO of Cisco.

In 1996, they opened the new logo and finally changed C to a bridge in the capital LOGO. After representing the succession of the digital signal, Chambers soon began to reform Cisco according to his ideas.

He uses HP's system as a benchmark to transform the company's management structure. He also sorted out the product line and asked each product line to become the first or second place in the market.

In order to quickly expand the scale of business, Chambers also raised the banner of merger and crazy corporate mergers and acquisitions.

In fact, Cisco's mergers and acquisitions have been tested as early as 1993.

In September of that year, they carried out their first acquisition at a price of $ 90 million and bought the Ethernet switch startup Crescendo.

Later, they bought several similar companies one after another, and on the basis of these companies, they launched the Catalyst series switch (1994).

Catalyst series switch

Charles who tasted the sweetness decided to go to the end "buy and buy".

In 1996, under the leadership of Chambers, Cisco acquired 13 companies. In 1997, this number became 19. This year, the number of employees of the company exceeded 1,100.

As of 2000, Cisco has acquired a total of 69 companies, and its turnover has grown from $ 100 million to $ 18.9 billion. The number of employees of the company exceeds 31,000.

The key to the successful acquisition lies in digestion, and Chambers knows this. Therefore, when he chooses the acquisition object, he will give priority to choosing a Silicon Valley company, which can avoid the trouble of moving the other party's employees and family members.

Moreover, at the time of acquisition, Cisco is very generous and generous, and can always issue a quotation that the other party is difficult to refuse.

There is an interesting example that when Siko acquired CERENT CERENT in 1999. Charles found the CEO of this company, and asked, "Tell me how much money can I buy your company?" The other party was shocked, and then pretended to be calm and answered, "Tell me how much I spend can I spend Make you give up this idea? "

Finally, I still speak strength. Cisco acquired a small company with a sales revenue of more than 10 million US dollars in the two -year sales revenue for $ 6.9 billion.

The sturdy acquisition style of Chambers became the talk of people at the time. Some people describe Qianbers: "Like a wolf from Silicon Valley, constantly search for prey for mergers."

Chamber himself also said, "We will try to get the products we need. Once we find what we like, we will get it at all costs."

The media has always liked this unique CEO style.

In order to praise the great success of Chambers and Cisco, the American media could be said to be extremely beautiful at that time.

"Line" magazine praised Siko employees as a repair worker in the Internet era and bridge the road to the Internet. "Commercial Weekly" refers to Cisco as a high -tech wizard, and the success of Cisco is attributed to Chambers "impeccable management, superb sales skills and a series of rapid acquisitions."

"Fortune" magazine is not far behind. He has published a special praise of Siko as a super new forces in the computer industry, the real king of the Internet, and Chambers is "the best CEO on the earth."

Charm who appeared on the cover of "Fortune" magazine

In fact, the reason why Chambers and Cisco can quickly expand mergers and acquisitions, in addition to their own management, there are indeed two brushes, the most important thing is the help of the environment.

At that time, the Internet was developed at a high speed, and technology stocks were sought after by the capital market. Therefore, many funds have flowed to technology companies such as Cisco not only coaxing the stock price, but also formed a bubble. Because of the "help" of these capitals, Charles can throw a lot of money and acquire it everywhere.

█ The technical expansion route of the 1990s

Anyway, from the perspective of technology and products, Cisco's crazy acquisition really helped himself build an unprecedented large business map and a variety of product systems. Their tentacles extended to almost all corners of the information technology.

We might as well stand at the perspective of the product to see how Cisco's technical route developed in the 1990s.

When Cisco was listed in 1990, it was mainly router manufacturers mainly based on AGS products.

In January 1993, Cisco launched the Cisco 7000 router.

Cisco 7000 router

The forwarding performance of this router is 110,000 packets per second, which is 50%higher than the previous "AGS+" router.

In addition, it also includes redundant power supply, hot insertion cards, and memory that is convenient for software upgrades. It supports SNA, Decnet, IPX, Appletalk and IP and other protocols. It is the first real operating router.

At that time, the US MCI company and Pacbell (Pacific Bell) were both users of Cisco 7000. They used this router to build their own Internet basic network.

In June 1993, Cisco launched the CISCO 2000 router series facing the low -end market, mainly for small and medium -sized enterprises.

Cisco 2000 router

At the same time as refined router technology, as mentioned earlier, Cisco has also entered the Ethernet switch market through acquisitions, and gradually became a leading enterprise.

In the 1990s, ATM and frame relay technology developed rapidly. In particular, ATM technology is in a state of fierce competition with IP technology. Cisco reserves all these technologies, and some are self -research and some are acquired through mergers and acquisitions.

In April 1996, Cisco acquired Stratacom at a high price of $ 4.67 billion to obtain their ATM and frame recreation WAN exchange equipment technology.

At that time, many telecommunications operators enhanced network capacity based on ATM and frame relay technology. With the help of acquisitions, Cisco also extended its own market from traditional government -enterprise customers (large companies, government agencies, public undertaking and education institutions) to the field of operators.

In the mid -to -late 1990s, digital user lines (DSL) equipment and IP telephone business flourished, and Cisco acquired a number of related companies. DSL and IP voice technology have provided great help for Cisco to enter the emerging network field.

Cisco's DSL device

In 1997, the CISCO 12000 series routers were launched for the first time. The processing capacity was 2.5 million packets per second. It was specially used to support the "backbone network" arteries of Da Telecom, which significantly improved the performance and reliability of the Internet.

CISCO 12000 series router

In 1999, Cisco added two new acquisition areas: fiber fiber network and wireless network.

During that period, in order to cope with a large number of voice, videos, and data needs, telecom operators focused on the construction of fiber fiber networks and expanding network capacity. Cisco also made investment and layout.

It is worth mentioning that in addition to products and technology, Cisco also attaches great importance to personnel training and ecological construction.

The famous Cisco certification was officially launched by Cisco in October 1997.

This certification has a very high gold content in the early days, which often means high -tech treatment, and many young people are rushing.

The CCIE certificate, the dream of countless IT daeous silk

█ 2001-2005: Falling into the altar, encircle your opponent

Entering 2000, Cisco finally reached its peak period.

At that time, Cisco's network switch market share was as high as 69%, and the market share of the network router exceeded 85%. Microsoft's Windows, Intel's processor, Cisco's network device, is called the Wintelco system by the world, represents the three major standards of computer software, hardware, and networks.

On March 27, 2000, this was a historic moment. Cisco's total market value reached a record of US $ 555 billion, becoming the highest market value company at that time. Cisco's one -day transaction volume exceeded the entire Shanghai stock market.

Things must be reversed, and the prosperity must decline. Soon, Cisco ushered in his own dark moment.

In 2001, the global Internet economy bubble was broken, bringing a heavy blow to many technology companies including Cisco. The market value of Cisco once fell from US $ 579.2 billion to 164.2 billion US dollars (two -thirds).

In order to reverse the decline, in April 2001, Chamber, who had vowed not to lay off, hurt his hand in pain, not only the sales of $ 2.2 billion in excess inventory, but also 18%of the layoffs, which is 8,500.

At the same time, he reduced his salary to one dollar a year to become the world's lowest CEO. (Later, this approach was imitated by many CEOs.)

While layoffs and salary reduction, Chambers began to examine his blind expansion strategy. He cut the 50 products lines of Cisco by 20%, transformed the remaining products, reduced the number of accessories they required and reduced 60%of suppliers. The crushing of the Internet bubble has brought a heavy damage to Cisco. But after all, Cisco is still there. After a period of recovery, it gradually returned to the right track.

At this time, Chambers suddenly discovered that his competitors "suddenly" became more.

Before 2000, Cisco was in an absolute market domineering position and basically had no rivals in the area. A few companies that pose a threat to it are Alcatel, Langxun and Nortel.

After 2000, the situation changed. Juniper and Huawei rose rapidly and began to challenge Cisco status.

Juniper is a young company, born in 1996.

In 1998, Juniper released its operating system Junos, and then released the first product M40 router. This product has increased the revenue of Juniper in 1999 to $ 100 million and seized 15%of the market share.

In 2000, Juniper was officially launched and launched a enhanced core router M-160, becoming a dead enemy in Cisco's high-end router.

What makes Cisco even more scared is Huawei from the new science and technology forces from China.

In 1995, Huawei established a research institute in Beijing and began to join the operator's router market. In 2000, Huawei released China's first high -end router, Netengine, marking that it began to have the product capabilities of the core router.

In 2002, in a series of major domestic project bidding, Huawei defeated Cisco one after another and won a large number of market share.

Internationally, Huawei also boldly attacked.

In June 2002, Huawei officially appeared at the telecommunications equipment exhibition held by Atlanta, the United States for the first time. The data products displayed by Huawei are equivalent to Cisco products, but the price is 20%to 50%lower than the opposite.

Huawei also published a challenging advertisement on mainstream US media: "The only difference between them is the price."

It is said that Charles had stayed on the Huawei booth for more than ten minutes at the time, and asked the technical situation of Huawei's full range of routers in detail. The Huawei staff did not recognize Chamber, but desperately explained.

After aware that Huawei was a serious threat, Charles quickly began to implement its own suppression plan. The most effective means he thought of is a legal lawsuit.

As a result, the famous Huawei Cisco "Century Litigation" later.

I won't say much about the process of this lawsuit. In the end, on July 28, 2004, Huawei and Cisco reached a settlement agreement to terminate the lawsuit.

The lawsuit helped Huawei awareness in the world. Later, Huawei's development rate became faster, and the market share of Siko continued to eat. Huawei and 3COM jointly established Hua San (Huawei 3COM) also pose a great threat to Cisco.

█ 2006-2011: Entering the consumer market

In 2006, Charles re -adjusted the company's development strategy and began to launch the brand reinvention plan.

This year, Cisco proposed the "The Human Network" brand event and changed its company name from "Cisco Systems" to "CISCO", which aims to turn into a personal and home consumer brand.

According to Chambers' thoughts, Cisco needs to transform the company's image from software and hardware technology suppliers to companies that change the world and people's communication methods, and become leaders of communication and collaboration technology (VOIP, video conference, online collaboration).

In 2003, Cisco acquired Linksys to produce and sell household network consumer products.

They also lay out on the Web conference and audio and video conference telephones.

In 2005, Cisco acquired Scientific Atlanta for $ 6.9 billion to strengthen its video streaming technology. On October 24, 2006, Cisco launched "Telepresence". In 2007, they spent $ 2.9 billion and acquired Webex, a network conference service provider.

Netzhen, the pioneer of the video conference system

In 2008, Cisco's operating income reached 39.5 billion US dollars, with more than 65,000 employees around the world.

In 2009, Cisco acquired Pure Digital Technology for $ 590 million. The company is famous for making FLIP Video cameras. Cisco intends to seamlessly connect these cameras to Internet so that users can easily share their photos.

Flip Video camera

However, with the rise of smartphones, the idea was quickly shattered.

In 2011, due to the brutal market competition, Cisco's operation was once again in a dilemma. In desperation, they were forced to lay off 3,000 employees to reduce the cost of $ 1 billion. This year, they plan to sell the set -top box manufacturing plant to Foxconn.

█ 2012-Today: Strategic Transformation, Find Business Opportunities

In 2012, Cisco proposed a new goal to expand in the fields of Internet security, wireless technology and data centers, trying to transform itself into a first -class IT company. During that period, the situation in the entire Internet industry changed drastically.

The rapid development of mobile Internet, the rapid popularization of smartphones has driven the geometric growth of network traffic, and has formed tremendous pressure on the operator network.

As a result, the width and high performance network equipment, which is easier to operate, maintain and expand, began to replace old equipment. The communication network enters the stage of dense update iteration.

Strange to say, at this stage, Cisco's equipment frequently appeared "failure". Cisco's product vulnerability and backdoor problems have also attracted more and more attention.

In view of this situation, domestic substitutions have been strengthened in China, and the transmission and digital products of Huawei, ZTE, Xinhua III, Beacon and other companies have begun to become mainstream.

Later, everyone basically knew it. This replacement trend has continued until now.

Global router market share changes (2010-2019)

In July 2012, Cisco acquired TV software developer NDS for $ 5 billion.

In 2013, Cisco Systems was trapped in layoffs and product "back doors" storm, and his life was very bumpy. However, this did not hinder Chambers on the cover of Forbes magazine.

This year, Cisco began the concept of the Internet of Things, and launched a new "Tomorrow" event: "Today, more than 99%of the world's place has not been connected to the Internet. But we are working hard."

This year, Cisco replaced her logo again

In 2014, Cisco once again announced the layoffs, accounting for 8%of its total number of employees worldwide.

In May 2015, John Chambers, who has been at the helm of Siko for 20 years, announced his resignation of CEO (but continued to stay as chairman), and handed this position to then senior vice president, Chuck Robbins (Chuck Robbins, The Chinese name is Luo Zhuok). Cisco entered the Robins era.

Chake Robbins

After taking office, in order to save the company, Robins began to withdraw from the personal and home consumer markets and return to system network equipment.

Around 2015, Cisco broke its TV set -top box and cable modem business, and sold its LinkSys home router department to Bellkin International.

In addition, Robbins began to focus on layout of cloud computing, security, the Internet of Things and data analysis.

According to Robbins' ideas, Cisco needs to transform from a company that is based on hardware as a company to be centered on software and services.

Robbins also proved his thoughts with action. After taking over the CEO, Robbins acquired a total of 19 companies. Among them, only one is a hardware company, and the rest are software companies. The coverage areas include SDN, cloud, security, the Internet of Things and other fields.

In recent years, Cisco has been frequently acquired, and has also launched some new network equipment, cloud and SaaS services, analysis platforms, and machine learning applications.

Whether these measures will help Cisco to revitalize their majesty, it still needs to be observed further.

█ Conclusion

According to the latest data, in 2021, Cisco's annual revenue was US $ 49.8 billion, and its net profit was US $ 10.59 billion. This performance is still very good. The veteran giant Cisco is still a heavyweight player on the table.

In the course of the development of the head of the head, we will find that this is a great and legendary company.

In just decades, it has made important contributions to the development of the global communication network. Many of its technologies, until now, have been used on the Internet, supporting countless traffic and business.

Such a huge company has gone through a glorious highlight, and has also experienced painful sadness. He witnessed the rise of the global Internet and the crushing of the Internet bubble.

Cisco's stock price review (source: Wind, CITIC Securities Research Department).

The reason for the success of Cisco is mainly because of the opportunity of the times. They stepped on the trend of technology, quickly expanded the scale through research and development and mergers and acquisitions, and became the industry benchmark.

The reasons for their failure are also many aspects. In terms of external causes, fierce market competition and the rise of cloud computing have led to their decline. In terms of inner causes, the mergers and acquisitions are used to ignore the internal R & D innovation. The indifference to the demand for customers in large enterprises is also the main reason for their falling altar.

Anyway, Cisco's story has not ended. In the future, where will this giant go? Let the time tell us the answer.

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