"Layoffs" Chambers: Cisco "Myth" will reappear?

In the Happy Valley of the gifted youngsters, more than six years of chambers are becoming more and more like an exception, and Cisco, the veteran technology firm under his leadership, has been doing well for 20 years--except for the dotcom bust years, but now it seems like 2001 has returned.

July 18, Cisco issued a notice: will lay off about 6500 people, thereby reducing the cost of nearly 1 billion dollars a year, the number of layoffs accounted for 9% of all Cisco staff. Cisco also plans to sell its set-top box manufacturing plant to Foxconn, which has 5,000 workers, which means Cisco will cut its workforce by an unprecedented 11,500, accounting for 16% of the company's entire workforce.

Cisco's last round of mass layoffs occurred in 2001, when Chambers made a decision to lay off 8500 people in March, accounting for 18% of all Cisco employees. Cisco's share price fell from $80 to $10. After the layoffs were an important part of Chambers ' myth, Cisco emerged from the wreckage of the telecoms industry as a symbol of the recovery of US and global technology companies. 10 years later this scene repeats itself: The self-proclaimed "fast-acting" chambers restart the downsizing machine.

If history is truly cyclical, chambers ' broken wrists and focus will bring Cisco back to a healthy growth trajectory, which will give him a second life in Cisco's 16-year CEO career. But it's not easy to assume. Cisco's embarrassing situation today is starting with the change that Chambers started 10 years ago, and the unfortunate seeds were buried there.

It was the start of a series of highly difficult acquisitions and consolidations in Cisco-2003, when Cisco bought home and small-business networking equipment makers, bought a leading maker of cable-top boxes in 2005, and bought a low-cost flip camera maker in 2009. This has made it a breakthrough in the previous attempt to strengthen its router and switch products, into the home consumer network equipment market. Cisco also expanded in the video field, in 2001 after the acquisition of hardware and software digital video service Developers, in 2006, the launch of the video conferencing system "NET", 2007, and the acquisition of another video conferencing system service provider WebEx, integration into Cisco's Unified Communications department. At the end of 2009, Cisco once again bought a video conferencing equipment company Teng Bo.

In the current reorganization, most of these businesses have been sacrificed, leaving only a large and expensive network. It is Cisco's own video conferencing system, with two different venues of the meeting scene through the video screen to complete the full collage of the effect, so that you almost think the same room with each other. But it is difficult to apply in countries and regions with limited network bandwidth resources. On the other hand, companies such as Huawei and Hewlett-Packard have launched similar products, and the price is just one of the few Cisco networks.

It would be frivolous to think that Cisco's expansion was wrong. But it is clear that every time it will step on the wrong foot-when it swears to enter a new field, in the product, price, market environment judgment, it at least on the one hand will be selective deafness.

In the case of video chat system Umi, it does have a first-class technology and user experience, but its 599 dollar price tag is daunting, because the technical barriers to video services have been minimized, almost all ISPs can provide this functionality, and completely free. But if the price is lowered, more enterprise-class customers will choose to apply Umi to enterprise-level video communications, which can affect the sales of the network's real and WebEx systems.

Such examples also occur in products such as Linksys and Scientific-atlanta, where people often find cheaper alternatives in the marketplace. Pure Digital Technologies has stepped on the minefield to try to make it an intelligent image-capturing and sharing device, but the rapid popularity of smartphones has become a consensus at the time.

Cisco's expansion in other areas has shaken its roots: In the 2009, it killed itself in the "Unified computing" market, trying to provide customers with a full range of servers, data centers and virtualization systems, and so on, so that the server and data center vendors that used to work with it, IBM and HP, and so on, stood on its opposite. The result is self-evident that IBM has instead started to label Cisco rival Juniper's network equipment, while Hewlett-Packard is directly buying network communications device manufacturer 3Com, from the server to the end of the network device, which makes Cisco lost billions of of dollars per year sales.

Chambers is so optimistic that he thinks the new business can quickly fill the losses. But the path of HP's reverse kill to Cisco's heartland is smoother, as Cisco's technology advantage in traditional switches, routers and communications equipment has been overtaken by 3Com and Huawei in its quest for expansion, and has already entered the price war phase.

In Huawei, for example, the company, which was denounced by Cisco in 2003 as a "thief", has overtaken Cisco in the fields of cloud computing and data center, and has focused on cloud computing and massive data center solutions in areas such as Dell, HP and Oracle. When Cisco entered the Data center field in 2009, "cloud computing" was not elevated enough to the point. Until the restructuring, Chambers finally announced that "support for collaboration, data center, cloud transformation and video architecture," The expansion of the network platform will become the core of Cisco Focus.

Partner friends for the enemy, the core technology has no direction, price war passive, emerging business rhythm disorder and loss of focus ... All sorts of conditions have led to Cisco's current situation. On the other hand, Chambers must pay for the "reform" of his organisational structure 10 years ago.

Just when a company is facing a loss of core dominance, a failure to expand its business, and a solution that is to lay off the core business and management structure back to the old days, and to face up to rivals that are now becoming more aggressive, is there a worse way to go?

Cisco tells us:

Is technology important?

It's important that you create first-class products.

First-class products must win?

Not。 If the competitor is free, and has robbed his own money product business.

Where does the product line plan come from?

Technology is of course important, but market demand is more fundamental.

Who should make the market demand judgment?

CEO? It may be, but more important to grasp the tentacles of demand is sharp and effective.

Why does the CEO of Chambers look like a mess now?

Confidence in ability, nervousness about demand, and he's old.

(Responsible editor: Lu Guang)