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Summary:

Cisco is having a rough time — announcing a restructuring, layoffs and lowering its revenue forecast — but the server market is a bright spot for the networking giant. Yesterday, Cisco said it’s set to hit a run rate of $900 million in its server business.

Cisco's UCS server.

Cisco's Server in Shining Armor

Cisco’s unified computing system sales are up, according to a tweet yesterday from Jesse Freund, an analyst relations manager at Cisco. The tweet pointed out that according to Cisco’s earnings released Wednesday, the networking company now had 5,400 customers buying the gear, up from 4,000 from the close of last quarter. That puts the server business at a $900 million run rate for the year.

Last year’s server market was $48.1 $15 billion according to IDC, with IBM in the lead with sales about $5.6 $17.8 billion. But for a business that was launched two years ago aimed at a fairly conservative section of the market, it’s worth noting that Cisco is making some apparent strides. Some of those customers have clearly moved beyond testing into some real deployments.

However, the company was hammered in the stock market as it lowered its revenue growth expectations for fourth quarter and embarks on a restructuring operation that will include an unspecified number of layoffs to be detailed this summer. The slow drip of information tied to the restructuring has me wondering if Cisco is still trying to figure out its exact plans. Of course, we already think Cisco needs to refocus on networking before its core competency gets away from it.

  1. Is it possible that Cisco’s employees spend half their time in long meetings, and another quarter of their time writing, and apologizing for, reviews of each other’s performance in those meetings?

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  2. Hi Stacey,

    Cisco’s much ballyhooed data center sales sequentially declined during Q3FY11.

    Stunningly in my opinion, sales of the ultimate “phoenix” in Cisco’s new product reporting category – data center sales, sequentially declined by -$41 million (a -9.6% drop) during Q3′FY11.

    Cisco’s data center sales category includes Application Networking, Nexus Switching, Storage and Unified Computing Systems (UCS) products.

    This is noteworthy (again in my opinion), because it’s the first sequential quarterly data center sales decline since Cisco began reporting its new product category, which started with Q1′FY10.

    Until Q3′FY11, data center and services had been the only 2 sales categories at Cisco (since it reorganized its sales reporting), to never of had a sequential quarterly sales decline.

    Sincerely,

    Brad Reese

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  3. Hi Stacey,

    Back on June 15, 2010 Cisco published a three-part video interview of the networking industry’s first two Cisco Certified Architects (CCAr), Alvaro Retana and Khalid Raza.

    The CCAr cert is considered the PhD of Cisco certifications and is the highest achievable cert offered by Cisco.

    Amazingly, I confirmed this week that both Alvaro Retana and Khalid Raza now work for HP Networking, contributing to HP’s new FlexNetwork Architecture.

    So why do I find this so amazing?

    Well, according to Marc La Porte’s CCIE Hall of Fame, there’s only 3 Cisco Certified Architects (CCAr) in the entire world, and now 2 of them work for HP.

    Sincerely,

    Brad Reese

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  4. Cisco has a leadership vaccum.

    Chambers’ lieutenants include:
    Gary Moore – has no record of ever having led large scale product engineering or development.
    Padma – known for large following of tweets. Not visionary.
    Pankaj – astoundingly uninspiring.

    Charlie Giancarlo, Jayshree Ullal… John Chambers let them go. And those would have led Cisco.

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    1. Hi Sysco,

      Don’t forget the 7 Apple iPhone Doubts authored by Padmasree Warrior (co-head of Cisco Engineering) then Motorola’s CTO on January 10th, 2007:

      http://www.networkworld.com/community/node/23419

      The Apple iPhone ended 2007 as what one analyst called the fastest-growing consumer electronics product ever.

      And for the first 9 months ending September 29th 2007, Motorola’s sales declined by more than -$4 billion (-13%), while simultaneously Motorola’s operating earnings collapsed by -$3.8 billion to a loss of -$534 million:

      http://www.sec.gov/Archives/edgar/data/68505/000095013707016662/c20959e10vq.htm

      Then on December 4, 2007 Cisco announced the appointment of Padmasree Warrior as chief technology officer (CTO). Warrior came to Cisco from Motorola where she was executive vice president and chief technology officer:

      http://newsroom.cisco.com/dlls/2007/corp_120407.html

      This week of May 16th, Padmasree Warrior will announce further restructuring of Cisco’s Engineering:

      http://www.bradreese.com/blog/5-5-2011.htm

      Sincerely,

      Brad Reese

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