Cisco layoffs this week part of 'Transformation Project'

By , Network World |  IT Management, Cisco

Interestingly, all of this comes as Cisco wins European approval to close its $5 billion acquisition of pay-TV technology company NDS and absorb 5,000 new employees. It also coincides with a pivotal acquisition in the network virtualization and software-defined networking space, with VMware's $1.26 billion purchase of startup Nicira announced this week.

VMware, the leader in server virtualization and a longtime Cisco partner, is broadening its reach into network virtualization with the Nicira acquisition. Several analysts and other observers expect competition between VMware and Cisco to intensify and for their partnership to be strained.

More immediately though are product issues, beginning with WAAS. Cisco is the No. 2 vendor in WAN optimization behind Riverbed, but a distant No. 2. Its share of the $1 billion market is about 20 percent, compared with Riverbed's 40% to 50%, according to Dell'Oro Group.

WAAS revenue declined sequentially for Cisco in Q1 as it did for every major vendor in the market, Dell'Oro noted. But Cisco's WAAS revenue is at or below the level it was in Q2 2010 while Riverbed's has grown roughly 30% since then, according to Dell'Oro figures.

Also, Cisco a year ago combined WAAS's standalone business unit -- the Application Delivery Business Unit -- into its Services Routing Technology Group, which may have necessitated this week's restructuring to eliminate redundancies.

Yet Cisco says it remains committed to WAAS and has no current plans to discontinue the product.

"Speculation that Cisco has dissolved the WAAS business is inaccurate," a company spokesperson said. "Our plan to deliver it pervasively as part of the WAN infrastructure remains unchanged."

The collaboration technologies business was a disappointment during Cisco's fiscal Q3, which ended in late April. Sales were flat due to market dynamics and lack of execution. TelePresence specifically, a key piece of Cisco's collaboration strategy, was hit by decreased spending in public sector and enterprise.

CEO John Chambers, during the recent Cisco Live conference, more than once referred to the need for Cisco to improve its collaboration execution, including the need for more operational consolidation.


Originally published on Network World |  Click here to read the original story.
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