July 15, 2011, 11:53 AM — LAS VEGAS -- Despite the specter of perhaps the largest layoff in Cisco's history overhanging its annual customer conference, the company last week conducted business pretty much as usual at Cisco Live!
The conference, attended physically by 15,000 and virtually by 40,000, was heavy on topics such as data center, cloud - and Cisco's moves to correct the mistakes of recent quarters and recent years. Indeed, CEO John Chambers' keynote was almost contrite in tone as he sought to reassure customers that Cisco will come through its current challenges stronger and more resolute - in every aspect of the company.
"We're structuring Cisco to be leaner, drive innovation faster," Chambers told the customer audience. "We've got to be easier to do business with, include you in driving our product direction, share our roadmaps, have an easy-to-use product portfolio. But innovation is the buzzword on where we're going to go."
To get there though, Cisco's expected to cut between 5,000 and 10,000 jobs beginning in August, the first month of its 2012 fiscal year (Cisco's biggest workforce reduction to date took place in 2001 when it let 8,000 people go during the dot-com bubble.). Cisco has lost share and profits in switching, and its foray into consumer electronics has been disappointing.
Many blame Cisco current problems on ambitious incursions into 30 or so adjacent markets through 145 acquisitions over two decades that distracted the company from its core routing and switching business. Cisco also had a bloated management structure that stalled decision making, delayed product development and slowed the company's progress.
The upheaval still to come at Cisco did not dilute the company's mission at Cisco Live! The company announced the most significant upgrade in years to its most successful switch - the Catalyst 6500. Cisco also enhanced its data center and cloud portfolio with extensions to its Unified Computing Systems blade server chassis, its WAAS WAN acceleration appliances and its IronPort security line.
The 12-year-old Catalyst 6500 got a new Supervisor 2T routing and switching engine which doubles the switch's per slot capacity to 80Gbps. It was a curious announcement as Cisco had cited Catalyst 6500-to-Nexus 7000 switch migration and transition as a factor that eroded profits in its fiscal second quarter and helped set in motion the restructuring that Cisco's now facing.
Some viewed the announcement as an attempt by Cisco to backpedal on the Catalyst/Nexus transition in an effort to preserve profit margins in switching; or as an indication that Nexus was meeting some resistance in the $42 billion Catalyst 6500 base.
Cisco said it's merely a case of the market is "bifurcating" into separate requirements for the enterprise campus vs. the data center.
"It takes different technology," said John McCool, Cisco senior vice president and general manager of the Core Technology Group. "We'd be silly to walk away from that installed base and loyal set of customers."
It also gave Cisco an opportunity to take another swipe at bitter rival HP. Indeed, if Cisco was preoccupied with the impending layoffs it did not show in the feistiness with which it positioned the Catalyst 6500 Sup 2T vs. HP's A9508 switch.
"What kind of innovation have we seen come out of HP?" asked Scott Gainey, Cisco director of marketing for Unified Access Solutions. "The competition is on notice: Cisco does intend to compete and we intend to compete aggressively."
HP responded in kind, noting that Cisco was misleading the industry and its customers in comparing the Sup 2T to the A9508.
The UCS enhancements are an effort to enhance the scalability and performance of the data center consolidation system. Cisco added new fabric interconnects, a virtual interface card, a chassis I/O module and an update of its UCS management software to the UCS portfolio.
