Cisco Systems has the broadest and deepest product line in the internetworking business. You'll be surprised the first time you hold their product catalog-so thick and heavy that it's reminiscent of a catalog from a big computer company like IBM or HewlettPackard.

The product line has been in a constant state of flux over the last several years. This is partly due to the industry's relentless introduction of new standards and technologies, causing perpetual product-line turnover. But the flux has as much to do with Cisco's fervid pursuit of technology by acquisition.

The Cisco product line can be broken down into two categories:

  • Devices Specific hardware products outlined at the beginning of this chapter

  • Solutions The combination of hardware, software, and services to fit certain customer requirements

The industry solutions piece is part hype, but it's a good indication of where and how Cisco sees its individual products put to use. For example, a strategic focus now is on Voice over IP (VoIP). Should the much-touted data/voice convergence take hold, the potential exists for Cisco as the predominant IP device maker to become a key manufacturer of equipment used in telephone company back offices, and even of desktop data phones.


As mentioned earlier, the salient feature of Cisco's product line is that most devices run the Internetwork Operating System (IOS). Cisco will tell you that this enables customers to do a better job of configuring and managing internetworks. Cisco's competitors will tell you that IOS makes devices more expensive and takes away customer options in making future technology decisions. Both sides are right, of course-everything's a trade-off.

Although Cisco is well entrenched in the internetworking products battle, there are other companies out there firing their own salvos, hoping to gain enough ground on the field to make a name for their own companies.

Nipping at Their Tail

Cisco isn't bulletproof. The company has seen an increase in ambitious organizations trying to eat off its plate. There are a number of examples showing where competitors are gaining ground in the service provider networking race. Challenging the leader are Juniper Networks in high-speed core Internet routers, Nortel Networks in optical networking gear, and Redback Networks in edge switching.

One of the major reasons Cisco is losing ground in selling to service providers, say analysts, is that service providers are looking for the very best product available. Conversely, in the enterprise market-where Cisco maintains its dominance-a strong brand and a solid distribution channel are normally the deciding factors. Furthermore, service providers also are willing to cobble their networks together using equipment from a range of suppliers. This is not the preferred modus operandi of many corporate network managers-they'd rather use the same supplier across the board.

Customer service is also a factor in Cisco's slippage. Smaller networking companies can more easily give the one-on-one service to individual service providers than Cisco: It's impossible for Cisco to personally manage tens of thousands of enterprise accounts. This can be made up for, on the other hand, by giving a half-dozen carrier customers their undivided attention.

Case Study

One such upstart that has been making a name for itself is Juniper Networks, of Mountain View, California, which makes its own line of high-speed routers. Since its June 1999 IPO through 2001, its shares rose 494 percent, dwarfing Cisco's 118 percent rise during the same period. The pessimists, who thought that it was another baseless dot-com, were forced to reconsider. Juniper has real sales. Back in 1998, Cisco controlled 86.6 percent of the $175-million-a-year market for high-speed routers. At the same time, Juniper had a 6 percent share. Just one year later, Juniper had risen to a 17.5 percent slice of the $578 million pie. According to Dataquest, Cisco dipped to 80.7 percent. Juniper followed a value roller coaster ride, similar to Cisco's, through the early part of this decade. However, like Cisco, Juniper managed to weather the storm.

Juniper's gain on Cisco is due to its reliable hardware and corporate administration. Also, Juniper's JUNOS traffic management software is sometimes credited as being more reliable than Cisco's IOS system. Naturally, Cisco disagrees with this assessment, but the numbers are still cause for concern in San Jose.

What matters most, though, is that Cisco's IOS is far and away the most widely installed internetwork device operating system there is. This is leading many decision makers to view Cisco as the safe decision, given that the members of the internetworking labor market are more likely to be trained in IOS than in another environment.

Who Wants to Be a Millionaire?

For many tech companies, the Holy Grail of success isn't discovered just in the development and sale of a great product that people will use every day. Rather, it's having Cisco wave its hand across the company's brow in blessing, then acquiring it. In turn, this transforms the company's executives and employees into instant millionaires-without even having to be the last one voted off the island.


Cisco is no stranger to acquisitions, building its router, switch security, wireless, and VoIP lines on technology they acquired.

In 1999 and 2000, Cisco was buying up companies faster than they could get their business names on letterhead. Then the tech bubble burst and Cisco hit the brakes on buying. Slowly but surely, Cisco has picked up its buying pace, and by 2005, the company had acquired a dozen companies and spent about $805 million that year.

One of its biggest acquisitions was early in January 2005, with the $450-million acquisition of Airespace, a wireless LAN switch vendor. Although Cisco already had a robust wireless portfolio, Airespace bolstered its product line with easier-to-use, easier-to-configure, easier-to-manage devices. Maybe even more important is the security boost that Airespace provides to Cisco's wireless product catalog.

Analysts look for Cisco to acquire even more technology in the coming months and years.


Cisco doesn't limit its acquisitions to hardware. About half of 2004's acquisitions were software companies, including Protego and Perfigo, which make security management and enforcement software; Dynamicsoft makes VoIP management software; Jahai Networks makes network management applications; and Twingo develops desktop security applications.

In the future, analysts expect Cisco to acquire software for video-on-demand services, network management software for virtualizing data center resources, and new applications for managing service delivery.

Cisco may be looking to enhance its data acceleration offerings, especially in the realm of XML (eXtensible Markup Language) traffic and security. Related to acceleration, Cisco might also be considering companies that specialize in WAN bandwidth optimization.

While Cisco makes big and small deals with their acquisitions, they seem to have their best luck with some of the smaller (less than $1 billion, if you consider that small). For instance, the buyout of Aironet in 1999 led to extremely popular and profitable wireless equipment.


But the acquisition with the longest reaching implications-at least to the general populace-comes in Cisco's $6.9 billion acquisition of Scientific-Atlanta, the company that makes set-top cable decoders. The acquisition is tied for Cisco's biggest ever (it purchased optical company Cerent in 1999 for the same amount).

The acquisition is somewhat out of character for Cisco. Historically, Cisco's acquisitions have been small companies in Silicon Valley. As Scientific-Atlanta's name belies, this purchase is on the other side of the country and is a large company.

The acquisition is a strategic move for Cisco, as cable companies are jockeying for position in the IPTV and IP video-on-demand market. Because those operators are already using Cisco gear in their head ends, putting Cisco gear into consumers' homes is a smart move.

Expanding Portfolio

Cisco continues to expand and develop its technology and product offerings by acquiring promising companies with impressive technology or services. Often times, Cisco's acquisitions can make or break a technology. For example, when the speculation started as to whether ATM could or should take over as the backbone technology of choice, many observers assumed that Cisco-a company with deep roots in Ethernet-would side with Gigabit Ethernet. Cisco instead went out and acquired StrataCom, the premier ATM technology company, in one of the largest technology mergers ever at that point. Cisco has also acquired software providers focused on providing solutions in such areas as network design and management. Cisco has spent years hyping itself as the industry's premier enterprise internetworking solutions vendor, and the company's willingness to adapt to technology trends instead of fighting them has impressed observers.

Table 1-1 shows Cisco's acquistions for 2001 through 2005, along with a brief description of what the company does or makes.

Table 1-1: Cisco Acquisitions From 2001 Through 2005

Acquisition Date



Nov. 29, 2005


A security intelligence information service called Intellishield Alert Manager.

Nov. 18, 2005


Probably the acquisition with the largest potential for Cisco. This digital cable television equipment manufacturer can help Cisco find a place on everyone's TV sets.

Sept. 30, 2005

Nemo Systems

Semiconductor company that develops memory chips for networks.

July 22, 2005

KISS Technology

Technology provider for networked entertainment devices.

June 27, 2005


High-speed packet processing solutions.

June 14, 2005

M.I. SecureCorporation

Security and VPN solutions.

May 26, 2005

FineGround Networks

Network appliances that accelerate, secure, and monitor application delivery.

May 23, 2005


Semiconductor solutions.

April 27, 2005

Sipura Technology

VoIP specialist.

April 14, 2005

Topspin Communications

Server fabric switches.

Jan. 12, 2005


Wireless LAN devices.

Dec. 20, 2004

Protego Networks

Network security software.

Dec. 9, 2004

BCN Systems

Flexible routing software.

Nov. 17, 2004

Jahi Networks

Network management appliances.

Oct. 21, 2004


Network access control.

Sept. 13, 2004


SIP software.

Sept. 9, 2004


IT infrastructure management.

Aug. 23, 2004


IP service control platforms.

July 8, 2004

Parc Technologies

Traffic engineering solutions and software for routing optimization.

June 29, 2004

Actona Technologies

Storage networking solutions.

June 17, 2004

Procket Networks

Router silicon technologies.

March 22, 2004

Riverhead Networks

Distributed denial-of-service attack software.

March 12, 2004

Twingo Systems

Desktop security with SSL andVPNs.

Nov. 12, 2003

Latitude Communications

Audio and Web conferencing.

March 20, 2003

Linksys Group

Consumer SOHO devices.

March 19, 2003


Echo-canceling software.

Jan. 24, 2003


Intrusion detection software.

Oct. 22, 2002

Psionic Software, Inc.

Intrusion detection software.

Aug. 20, 2002

Andiamo Systems

Storage switching systems.

July 25, 2002

AYR Networks

Distributed networking software.

May 1, 2002

Navarro Networks

Ethernet ASIC designing.

May 1, 2002

Hammerhead Networks

Networking software designing.

July 27, 2001

Allegro Systems

VPN acceleration.

July 11, 2001


RPR chipset company.

Cisco Solutions

Cisco touts itself as the premier "end-to-end enterprise solutions provider" in internetworking. What this means in English is that Cisco has the breadth of product line functionality to fulfill virtually any customer requirement, whether integrated voice/data, ATM backbones, or integration to IBM SNA environments, and so on. In practical terms, Cisco has been able to do this because of its foresight and raw cash. Having over $180 billion in market capitalization at the end of 2003 gave the company the financial muscle between now and then to fill product-line gaps and enter emerging areas by either intensive internal R&D or going out and acquiring the best-of-breed provider. As mentioned, Cisco has acquired well over 70 companies over the past several years. Each acquisition seems to have been made to assimilate an emerging technology, not to buy the smaller company's installed customer base.

Not all of Cisco's solutions technologies were buyouts; some were developed in-house. However, many of the major technology additions were through acquisition. The key factor in each is whether Cisco can successfully integrate the new technology into the company's unifying IOS architecture-also known as fusion. Despite the wishes of certain competitors, so far, Cisco has done fairly well at that, with some exceptions. Here's an overview of the major solutions areas:

  • IOS feature sets IOS can be purchased a la carte for many devices, to obtain the functionality needed to deal with the customer's installed environment, whether IBM SNA, Novell NetWare, AppleTalk, or vanilla IP.

  • ATM Cisco has invested heavily in ATM technology, with the StrataCom buyout bringing a full line of ATM WAN switches, multiservice ATM switches, and edge concentrators. Cisco also purchased a company called LightStream to obtain the LightStream 1010 ATM module for connecting to ATM campus LANs.

  • Voice/data integration To consolidate its position in the emerging VoIP market, Cisco offers the VCO/4K open programmable voice/data switch, Cisco-to-circuit switched gateways, and other voice integration products.

  • Network management Several disparate management software applications, both homegrown and acquired, are slowly being melded together under the CiscoWorks banner. Right now, things are still a bit of a mess, with three more-or-less standalone products: Resource Manager Essentials for managing routed networks, CWSI Campus for managing switched networks, and NetSys Baseliner for designing network topologies. CWSI and NetSys were acquisitions. Additionally, security management is handled through CS-MARS, which was the result of the acquisition of Protego.

  • ISP connectivity Cisco offers "director" products for use by ISPs in managing their high-volume traffic loads. Cisco LocalDirector is a sophisticated server connection management system that manages traffic based on service requested, distribution method, and server availability. Cisco DistributedDirector is similar, but provides dynamic, transparent Internet traffic load distribution management between geographically dispersed servers.

  • Security CiscoSecure is the company's integrated client-server security management system. IOS itself incorporates many security commands at the client device level, and CiscoSecure keeps a central database of users, user authorizations, and security event history. Cisco offers the PIX Firewall for traffic-level security and Cisco ASA for traffic and application security. For those accessing a network across the Internet, Cisco offers VPN solutions that are matched with Cisco's products, which are including more and more VPN functionality. Cisco also offers an IOS feature set called IOS Firewall and Secure ACS, which is essentially an expanded set of IOS commands that allows configuration of most midrange and high-end Cisco routers with firewall functionality.

  • Storage area networking (SAN) The extent to which a computer network is functional goes beyond whether everyone in an organization has a computer on his or her desktop or whether the network is faster than greased lightning.

    The material that courses through the network-namely, the data-must be stored somewhere. For organizations that have a need to store and maintain a great deal of data, storage area networks (SANs) are an increasingly popular option. SANs are communications platforms that interconnect servers and storage devices at gigabit speeds. Products like the Cisco MDS 9000 Series of multilayer switches help provide an environment in which data can be maintained.

  • Content networking In order to provide access to specific network content, many organizations are implementing content networking solutions. Content networking provides an intelligent way to route content where it is needed. For example, content networking can help feed e-learning, streaming media, and file distribution. Cisco has developed a number of tools and technologies to help facilitate content networking, including the 7300 Content Engine, which accelerates content delivery, improving scalability and content availability.

  • Wireless A few years ago, wireless networking technology might have seemed too expensive to be a feasible option for networking. Now, however, wireless is within everyone's grasp, and many computers come with wireless cards already installed. Cisco is no stranger to the world of wireless, having developed its own enterprise products. However, the company has also extended its reach into the realm of home and small business wireless networking through the acquisition of Linksys in 2003.

  • Voice over IP (VoIP) Computer networks aren't just useful for transporting data between servers and clients. By utilizing the popular Internet Protocol, telephone conversations can take place across computer networks by utilizing IP telephony. Cisco offers a number of devices to help facilitate VoIP, from handsets plugged into switches to wireless IP phones to VoIP-capable routers and switches. VoIP is a popular technology because it allows low-cost telephony within an organization-whether the organization is situated within one building or at branch locations spread across the world.

  • Video distribution Delivering video across internetworks encompasses multimedia as well as videoconferencing. Anyone who's spent any time watching a movie on their computer or downloading an MP3 file knows how large these files can be. Cisco helps the delivery and management of such files with its Video Portal and Video ortal Manager systems.

These and other Cisco solutions are covered throughout this book. We won't go into them in any detail here; you need to get technical first. That process starts in the next chapter-a primer on internetworking technology basics.

Cisco. A Beginner's Guide
Cisco: A Beginners Guide, Fourth Edition
ISBN: 0072263830
EAN: 2147483647
Year: 2006
Pages: 102

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