Rivals low price competition Cisco or layoffs 14%

Enterprise network market competition is increasingly fierce.

July 12, said http://www.aliyun.com/zixun/aggregation/31877.html "> The world's largest Internet equipment maker Cisco will lay off 7000 people in August this year, and some 3,000 employees will retire early , accounting for 14% of the total number of Cisco employees. The departments involved in the downsizing include both the consumer business unit and its core business unit.

A Cisco dealer told reporters that since the beginning of last year, they have heard that Cisco is laying off workers, and that the router's department has laid off more staff. He said Cisco products are more expensive in price and have recently been robbed by some competitors.

To a set of Cisco "NET really" video conferencing products for example, the domestic price of up to more than 2 million yuan, and Huawei launched a similar product price of only about 1 million yuan, although Cisco has been claiming that its product quality is far better than competitors, but still been robbed a lot of orders.

Telecommunications experts, Flying Elephant Network CEO Xiang said Cisco in the backbone of the business of this piece still has a very favorable market position, however, by the impact of the business increasingly saturated, this market segment price war recently increasingly fierce.

In fact, companies including Juniper, Hewlett-Packard, Huawei and other manufacturers in the price of Cisco's products have a certain impact, leading to a decline in Cisco's profits.

Cisco's share of the global switch market fell 5.8% to 68.5% per cent year-on-year in the first quarter of 2011, according to the research company, Dell ' Oro, in a report this May. In the global router market, the share fell 6.4% to 54.2%. While Cisco still has an absolute advantage in this area, Cisco's latest quarterly earnings show Cisco's quarterly profit fell 18% per cent as revenue grew by 5%.

Xiang pointed out that in this increasingly mature market, the overall will not have a burst of growth, so there is a price war is inevitable, in this case, the old telecommunications equipment manufacturers are in the pioneering new areas.

Huawei, for example, has made drastic adjustments to the company's business structure earlier this year, dividing its business into four big chunks – pipelines (operators), business, terminals and others – in hopes of breaking the market for a single service operator in the past. Huawei's newly established business unit is in many ways directly competitive with Cisco.

Cisco's recent massive layoffs seem to confirm that the world's communications market is undergoing subtle changes. Earlier this year, Xu, the head of Huawei's new business business, said in an interview that the advent of the cloud-computing era had allowed big companies in the communications industry to start running again.

Xiang said Cisco has been exploring new business areas in recent years, but it is not a success. Cisco, for example, seems to be moving slower in the now-popular mobile-communications market, but Huawei has been quicker to expand in the field and take the initiative.

Analysts predict that Cisco's massive layoffs are designed to deal with rivals ' low-cost competitive tactics, which will save Cisco 1 billion of billions of dollars a year in operating expenses, boosting Cisco's earnings per share by 8% in 2012 years.

The Cisco CEO, John Chambers, admitted in April this year that Cisco had made mistakes in its business development in recent years, and that Cisco should focus more on core areas rather than expanding into new areas, saying Cisco would withdraw from some non-core businesses. Prior to this, Cisco has been known for its huge acquisitions in the industry. But these mergers and acquisitions led Cisco and HP, IBM and other former partners to become rivals, and affected Cisco's business.

July 12, for the million people, Cisco China public relations related to reporters said: "So far has not received any notice of layoffs, all information will be held in August, Cisco in the fourth quarterly results of the communication will be issued, and stressed that the current Cisco China Business operation is normal."

(Responsible editor: admin)