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© 2006 Cisco Systems, Inc. All rights reserved. 1
© 2006 Cisco Systems, Inc. All rights reserved. 2
© 2006 Cisco Systems, Inc. All rights reserved. 3
Cisco Presentation Overview
 Company History
 Products and Services
 ...
© 2006 Cisco Systems, Inc. All rights reserved. 4
Introduction to Cisco Systems, Inc
 Develops and sells networking produ...
© 2006 Cisco Systems, Inc. All rights reserved. 5
Quick Facts
Products: Network Equipment
Services: Design, Implementation...
© 2006 Cisco Systems, Inc. All rights reserved. 6
Cisco: A History of Innovation and Acquisition
1984 1985 1986 1987 1988 ...
© 2006 Cisco Systems, Inc. All rights reserved. 7
2007 Executive Leadership Team
Source: http://newsroom.cisco.com
John T....
© 2006 Cisco Systems, Inc. All rights reserved. 8
Products
 Broadband Cable
 Cisco Interfaces and Modules
 Cisco IOS So...
© 2006 Cisco Systems, Inc. All rights reserved. 9
Routers for Small, Mid-Sized, and Large Businesses
Source: http://www.ci...
© 2006 Cisco Systems, Inc. All rights reserved. 10
Routers for Service Providers
Routers for Service Providers
Source: htt...
© 2006 Cisco Systems, Inc. All rights reserved. 11
Switches for Small to Large Businesses
Source: http://www.cisco.com/en/...
© 2006 Cisco Systems, Inc. All rights reserved. 12
Cisco 2600 Routers and 3500 Switches
Source: Team Developed (Photo take...
© 2006 Cisco Systems, Inc. All rights reserved. 13
Cisco 6500 Series Switch
Source: Team Developed (Photo taken with permi...
© 2006 Cisco Systems, Inc. All rights reserved. 14
Security Solutions
Adaptive Security Appliance
Source: http://www.cisco...
© 2006 Cisco Systems, Inc. All rights reserved. 15
WebEx Web Meeting Solution
Source: http://www.webex.com/smb/web-meeting...
© 2006 Cisco Systems, Inc. All rights reserved. 16
Cisco TelePresence
Source: http://www.cisco.com/en/us/products/ps7087/i...
© 2006 Cisco Systems, Inc. All rights reserved. 17
Services
 Storage Networking Services
 TelePresence Services
 Unifie...
© 2006 Cisco Systems, Inc. All rights reserved. 18
Cisco Services Mission
 Breakaway Customer Loyalty in All Segments
 E...
© 2006 Cisco Systems, Inc. All rights reserved. 19
Industry Markets Served
 Carrier Infrastructure
–Switch/Routing
–Ether...
© 2006 Cisco Systems, Inc. All rights reserved. 20
What is WiMAXWiMAX?
 WiMAX is a wireless digital communications system...
© 2006 Cisco Systems, Inc. All rights reserved. 21
The Burning Platform
 Demand vs. industry capacity down
– Creates pric...
© 2006 Cisco Systems, Inc. All rights reserved. 22
Industry Growth
20072006200520042003
• There is continued rapid growth ...
© 2006 Cisco Systems, Inc. All rights reserved. 23
Current Industry Trends
Virtual and Digital Presence
Face-to-Face meeti...
© 2006 Cisco Systems, Inc. All rights reserved. 24
Major Competitors in the Industry
 AVAYA
Voice and Data Integration Se...
© 2006 Cisco Systems, Inc. All rights reserved. 25
CISCO vs. Competitors
Competitive Landscape
65%10%
4%
21%
CISCO
AVAYA
J...
© 2006 Cisco Systems, Inc. All rights reserved. 26
Strategic Alliances –
Source: http://www.cisco.com/web/partners/pr67/pa...
© 2006 Cisco Systems, Inc. All rights reserved. 27
Net Sales FY 2007
$34,922 Billion*
55%
21%
10%
10%
4% United States &
C...
© 2006 Cisco Systems, Inc. All rights reserved. 28
Primary Business Segments
By Percentage of Sales RevenueBy Percentage o...
© 2006 Cisco Systems, Inc. All rights reserved. 29
Primary Business Segment: Products
Routers
20%
Others
6% Switches
35%
S...
© 2006 Cisco Systems, Inc. All rights reserved. 30
Primary Business Segment: Services
Source: CISCO 2007 10-K, Annual Repo...
© 2006 Cisco Systems, Inc. All rights reserved. 31
Cisco Stock Performance (5 Years)*
$0.00
$50.00
$100.00
$150.00
$200.00...
© 2006 Cisco Systems, Inc. All rights reserved. 32
Financial: Net Sales Change
$34.9
$28.5
$11.4
$10.5
$2.3
$2.1 $5.1
$4.9...
© 2006 Cisco Systems, Inc. All rights reserved. 33
Reasons for Net Sales Change
 $1.64 billion increase of switch sales
–...
© 2006 Cisco Systems, Inc. All rights reserved. 34
SWOT Analysis
Strengths
 Culture
 Market Position
 Innovation
 Able...
© 2006 Cisco Systems, Inc. All rights reserved. 35
Value-Chain Analysis
General Admin
M
argin
M
argin
HR Mgmt
Tech/R&D
Pro...
© 2006 Cisco Systems, Inc. All rights reserved. 36
Porter’s Five
Forces Model
Competitive Rivalry
Nortel
Juniper Networks
...
© 2006 Cisco Systems, Inc. All rights reserved. 37
Target Market Analysis
 Carrier Services
– Networks, Routers, Switches...
© 2006 Cisco Systems, Inc. All rights reserved. 38
Customer Activity Cycle
Pre-Purchase
Customer
• Proof of added value
• ...
© 2006 Cisco Systems, Inc. All rights reserved. 39
Consumer Activity Cycle
Pre-Purchase
Consumer
• Research feature and be...
© 2006 Cisco Systems, Inc. All rights reserved. 40
Mobile Broadband Widely Deployed
• High-speed WiFi (802.11n)
• High ban...
© 2006 Cisco Systems, Inc. All rights reserved. 41
Future Customer Expectations
Mobility
Do anything anywhere
Hands free d...
© 2006 Cisco Systems, Inc. All rights reserved. 42
Future Customer
Expectations
Strategic Intent Model
Current Competencie...
© 2006 Cisco Systems, Inc. All rights reserved. 43
Competencies
Acquisitions
Customer
Support
Mgmt.
Innovation
Mgmt.
Brand...
© 2006 Cisco Systems, Inc. All rights reserved. 44
Current Competency Grid
Low
Competitors
Fear
High 10
8
6
4
2 4
2
6
Core...
© 2006 Cisco Systems, Inc. All rights reserved. 45
Distinctive Core Corporate Contracted
Acquisitions
The Competency Conti...
© 2006 Cisco Systems, Inc. All rights reserved. 46
Future Recommended KPI’s
Return on Net
Assets
Return on Net
Assets
Empl...
© 2006 Cisco Systems, Inc. All rights reserved. 47
Current Strategy and Focus of Cisco
Source: Cisco 2008 Initiatives
Lead...
© 2006 Cisco Systems, Inc. All rights reserved. 48
Current Strategy and Focus of Cisco (Cont.)
 Implement 18+ cross-funct...
© 2006 Cisco Systems, Inc. All rights reserved. 49
Cisco’s Future Outlook and Strategies
Future Outlook
 Utilize technolo...
© 2006 Cisco Systems, Inc. All rights reserved. 50
Source: Team Developed
 Integrate WebEx technology with TelePresence t...
© 2006 Cisco Systems, Inc. All rights reserved. 51
Future Recommendations (Cont.)
 Must continually press U.S. government...
© 2006 Cisco Systems, Inc. All rights reserved. 52
Future Recommendations (Cont.)
 Fully exploit WiMAX technology
– Alrea...
© 2006 Cisco Systems, Inc. All rights reserved. 53
References
 CISCO 2007 10-K, Annual Report to Stockholders
 http://ne...
© 2006 Cisco Systems, Inc. All rights reserved. 54
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Cisco Strategic Profile

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Cisco Strategic Profile

  1. 1. © 2006 Cisco Systems, Inc. All rights reserved. 1
  2. 2. © 2006 Cisco Systems, Inc. All rights reserved. 2
  3. 3. © 2006 Cisco Systems, Inc. All rights reserved. 3 Cisco Presentation Overview  Company History  Products and Services  Industry / Market Analysis  Analysis of Financial Performance Vs. Competitors  Company Focus - SWOT & Value Chain Analysis  Porter’s Five Forces  Customer Activity Cycle  Strategic Intent  Company Views on Future Outlook and Strategies  Team Assessment of Future Strategies and Core Competencies  Implications of Turning Strategy into Action  Recommendations & Conclusions  References: –Primary: Interviews, Cisco Website, and Annual Reports –Secondary: Marketwatch.com, CurrentAnalysis.com, Reuters.com, YouTube.com
  4. 4. © 2006 Cisco Systems, Inc. All rights reserved. 4 Introduction to Cisco Systems, Inc  Develops and sells networking products and related communications technology based on Internet Protocol (IP)  Provides training to associates through education initiatives  Provides design, implementation, and post purchase support for network systems Source: http://newsroom.cisco.com
  5. 5. © 2006 Cisco Systems, Inc. All rights reserved. 5 Quick Facts Products: Network Equipment Services: Design, Implementation, Education, and Technical Support Size: $34 Billion in Revenue 65% Market Share Industry Strength: High Issues: Sustaining Growth Shifting Customer Base History: Founded in 1984 Industry: Telecommunications Equipment
  6. 6. © 2006 Cisco Systems, Inc. All rights reserved. 6 Cisco: A History of Innovation and Acquisition 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 Lerner and Bosack form a small business in San Francisco called Cisco Move H.Q. to Atherton, CA Develop & Ship Massbus Ethernet Interface System Launch first-ever multi- protocol router Lerner and Bosack form a small business in San Francisco called Cisco Move H.Q. to Atherton, CA Develop & Ship Massbus Ethernet Interface System Launch first-ever multi- protocol router Venture Funding from Sequoia Capital Venture Funding from Sequoia Capital 3 Products $27M Rev. 111 Employees 3 Products $27M Rev. 111 Employees IPO Raises $224M 251 Employees IPO Raises $224M 251 Employees Stock Splits 1st Int’l Expansion - Canada - France - England - Japan Patent: Internal Gateway Routing Protocol Stock Splits 1st Int’l Expansion - Canada - France - England - Japan Patent: Internal Gateway Routing Protocol More International Expansion - Belgium - Mexico - Hong Kong - Brazil Acquisitions Begin - Crescendo Comm. More International Expansion - Belgium - Mexico - Hong Kong - Brazil Acquisitions Begin - Crescendo Comm. Source: http://newsroom.cisco.com Decade One 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Launches Network Academy Launches Network Academy Reaches $100B in Market Capitalization - Fastest in History Over 300 Acquisitions 150 Patents Issued $18.9B in Revenue Reaches $100B in Market Capitalization - Fastest in History Over 300 Acquisitions 150 Patents Issued $18.9B in Revenue Shift in Strategy from Acquisition to Innovation Launches Wide Area Wireless Networking Launches Carrier Routing System (Mar. ’04) Continued International Expansion Shift in Strategy from Acquisition to Innovation Launches Wide Area Wireless Networking Launches Carrier Routing System (Mar. ’04) Continued International Expansion LinkSys Acquisition LinkSys Acquisition WebEx Acquisition WebEx Acquisition Scientific Atlanta Acquisition Scientific Atlanta Acquisition
  7. 7. © 2006 Cisco Systems, Inc. All rights reserved. 7 2007 Executive Leadership Team Source: http://newsroom.cisco.com John T. Chambers Chairman & CEO Paul Mountford President Emerging Markets Theatre Yasuki Kurosawa President Cisco Systems KK (Japan) Chris Dedicoat President European Markets Owen Chan President Asian Pacific Theatre We are a company that will enable all of life’s experiences, both personal and business, for the future. ~ John T. Chambers
  8. 8. © 2006 Cisco Systems, Inc. All rights reserved. 8 Products  Broadband Cable  Cisco Interfaces and Modules  Cisco IOS Software  Interoperability Systems  Network Management  Optical Networking  Routers  Security and VPN  Server Networking and Virtualization  Storage Networking  Switches  TelePresence  Universal Gateways and Access Servers  Video and Content Delivery  Voice and Unified Communications  Wireless Source: http://www.cisco.com/en/US/products/index.html
  9. 9. © 2006 Cisco Systems, Inc. All rights reserved. 9 Routers for Small, Mid-Sized, and Large Businesses Source: http://www.cisco.com/en/us/products/hw/routers/index.html#,hide-id-trigger-g1-enterprise
  10. 10. © 2006 Cisco Systems, Inc. All rights reserved. 10 Routers for Service Providers Routers for Service Providers Source: http://www.cisco.com/en/us/products/hw/routers/index.html#,hide-id-trigger-g1-sp
  11. 11. © 2006 Cisco Systems, Inc. All rights reserved. 11 Switches for Small to Large Businesses Source: http://www.cisco.com/en/us/products/hw/routers/index.html
  12. 12. © 2006 Cisco Systems, Inc. All rights reserved. 12 Cisco 2600 Routers and 3500 Switches Source: Team Developed (Photo taken with permission of Cisco Systems, Inc.)
  13. 13. © 2006 Cisco Systems, Inc. All rights reserved. 13 Cisco 6500 Series Switch Source: Team Developed (Photo taken with permission of Cisco Systems, Inc.)
  14. 14. © 2006 Cisco Systems, Inc. All rights reserved. 14 Security Solutions Adaptive Security Appliance Source: http://www.cisco.com/en/us/products/ps6120/index.html Cisco Unified 7941G IP Phone
  15. 15. © 2006 Cisco Systems, Inc. All rights reserved. 15 WebEx Web Meeting Solution Source: http://www.webex.com/smb/web-meetings.html
  16. 16. © 2006 Cisco Systems, Inc. All rights reserved. 16 Cisco TelePresence Source: http://www.cisco.com/en/us/products/ps7087/index.html
  17. 17. © 2006 Cisco Systems, Inc. All rights reserved. 17 Services  Storage Networking Services  TelePresence Services  Unified Communications Services  Unified Contact Center Services  Voice and Unified Communications Services  Wireless Services  Wireless/Mobility Services for Service Providers  Content Networking Services  Data Center Networking Services  Developer Services  Cisco Focused Technical Support  Metro Ethernet Services  Network Management Services  Routers & Routing Systems Services  Routing & Switching Services  Security Services Source: http://www.cisco.com/en/us/products/products_services_index.html
  18. 18. © 2006 Cisco Systems, Inc. All rights reserved. 18 Cisco Services Mission  Breakaway Customer Loyalty in All Segments  Extend Cisco’s Leadership in Systems / Solutions and Technology / Business Architectures  Productivity Leadership Through Innovation & Quality  Highly Profitable Service & Support Revenue Growth  #1 in Partner Services Success  #1 in Employee Loyalty  Create Innovative Business Models to Accelerate Customer & Shareholder Success in All Segments Source: http://wwwin.cisco.com/CustAdv
  19. 19. © 2006 Cisco Systems, Inc. All rights reserved. 19 Industry Markets Served  Carrier Infrastructure –Switch/Routing –Ethernet –Metro Ethernet Routers  Carrier IP Telephony –Application Servers –Switching & Signaling –Transport and Endpoints  Broadband Infrastructure –Digital Loop Carrier (DLC)/Multi- Service Access Platform (MSAP) –Fiber to the Premise (FTTP) –IP Services Platforms  Optical Infrastructure –Metro Access Systems –Optical Switching Systems  Wireless –CDMA (Code-Division Multiple Access) 2000 Network –GSM (Global System for Mobile Communication) –UMTS (Universal Mobile Telecommunications Service) –Metro-Scale WiFi Infrastructure –WiMAX Infrastructure (Worldwide Interoperability for Microwave Access)  Digital Media –Content Delivery Platforms –Content Security –IPTV Middleware –Video Headend Source: http ://www.currentanalysis.com/markets/telecom-infrastructure.asp
  20. 20. © 2006 Cisco Systems, Inc. All rights reserved. 20 What is WiMAXWiMAX?  WiMAX is a wireless digital communications system, also known as IEEE 802.16 – Intended for wireless metropolitan area networks  WiMAX can provide broadband wireless access: – Up to 30 miles from fixed stations – 3 - 10 miles from mobile stations  In contrast, the WiFi/802.11 wireless local area network standard is limited in most cases to only 100 - 300 feet Source: http://www.wimax.com/education
  21. 21. © 2006 Cisco Systems, Inc. All rights reserved. 21 The Burning Platform  Demand vs. industry capacity down – Creates price resistance & challenges to sustaining margins  Price-focused competitors from India & China are growing – Threatening Cisco's dominance in emerging markets  Product development by competitors can outperform CISCO products and new technical standards will make them outdated  Not enough people to cover transitioning customer base  Service providers’ purchasing patterns are becoming more uneven – Accuracy in Forecasting Sales – More rigid acceptance requirements are making the sales to implementation process more complex, and cycle time is increasing – Leading to slow revenue recognition – Focus on lead time performance is required Source: Team Developed
  22. 22. © 2006 Cisco Systems, Inc. All rights reserved. 22 Industry Growth 20072006200520042003 • There is continued rapid growth in the telecommunications industry • Cisco growth is inline with industry growth Source: http://www.marketwatch.com/tools/industry/focus.asp?bcind_ind=9578&bcind_sid=172&bcind_period=5yr Industry Growth Cisco Growth (Dow Jones US Telecommunications Index)
  23. 23. © 2006 Cisco Systems, Inc. All rights reserved. 23 Current Industry Trends Virtual and Digital Presence Face-to-Face meetings over a network Real-time file share and shared interface environments Digital storefront, conferences, press releases, and meetings in Virtual Worlds Data Centers Network-Based data center infrastructure services Mobile Networking Improved Efficiency Enhanced Customer Experience City-Wide wireless (hotspots) Real-time asset tracking Unified Networking Data, Voice, and Video on one Network Security Total Network Security Source: Team Developed
  24. 24. © 2006 Cisco Systems, Inc. All rights reserved. 24 Major Competitors in the Industry  AVAYA Voice and Data Integration Services Office Phone Systems Consulting  Juniper Networks IP Router Design and Sales Application Specific Chip Design Network Management Software VPN and Firewall Devices Support Services  Nortel Networks Core Network Switching Wireless Systems Optical Systems Source: http://www.reuters.com/investing
  25. 25. © 2006 Cisco Systems, Inc. All rights reserved. 25 CISCO vs. Competitors Competitive Landscape 65%10% 4% 21% CISCO AVAYA JUNIPER NORTEL Source: CISCO 2007 10-K, Annual Report to Stockholders, P. 24 *23% Increase in Revenue from 2006; MarketWatch.com. As a % of Revenue
  26. 26. © 2006 Cisco Systems, Inc. All rights reserved. 26 Strategic Alliances – Source: http://www.cisco.com/web/partners/pr67/part_strat_alliance_category.html
  27. 27. © 2006 Cisco Systems, Inc. All rights reserved. 27 Net Sales FY 2007 $34,922 Billion* 55% 21% 10% 10% 4% United States & Canada Europe Emerging Markets Asia Japan Cisco Geographic Market Sales Source: CISCO 2007 10-K, Annual Report to Stockholders, P. 24 *23% Increase in Revenue from 2006
  28. 28. © 2006 Cisco Systems, Inc. All rights reserved. 28 Primary Business Segments By Percentage of Sales RevenueBy Percentage of Sales Revenue  Products  Services  Others Source: CISCO 2007 10-K, Annual Report to Stockholders, P. 25 Others 6% Network Hardware 79% Services 15%
  29. 29. © 2006 Cisco Systems, Inc. All rights reserved. 29 Primary Business Segment: Products Routers 20% Others 6% Switches 35% Services 16% Advanced Tech. 23% Source: CISCO 2007 10-K, Annual Report to Stockholders, P. 25 Percentage of Sales RevenuePercentage of Sales Revenue  Switches  Routers  Advanced Technologies
  30. 30. © 2006 Cisco Systems, Inc. All rights reserved. 30 Primary Business Segment: Services Source: CISCO 2007 10-K, Annual Report to Stockholders, P. 25 Others 6% Switches 79% Services 16% Percentage of Sales RevenuePercentage of Sales Revenue  Services  Others
  31. 31. © 2006 Cisco Systems, Inc. All rights reserved. 31 Cisco Stock Performance (5 Years)* $0.00 $50.00 $100.00 $150.00 $200.00 $250.00 $300.00 2002 2003 2004 2005 2006 2007 Cisco Systems, Inc. S&P Information Technology S&P 500 Source: CISCO 2007 10-K, Annual Report to Stockholders *Assuming investment of $100.00 in Cisco common stock on July 26, 2002 and all dividends were reinvested
  32. 32. © 2006 Cisco Systems, Inc. All rights reserved. 32 Financial: Net Sales Change $34.9 $28.5 $11.4 $10.5 $2.3 $2.1 $5.1 $4.9 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 Cisco Nortel Juniper Avaya Fiscal Year '07 / '06 Fiscal Year '06 / '05 Source: http://www.reuters.com/investing BillionsofUSDollars
  33. 33. © 2006 Cisco Systems, Inc. All rights reserved. 33 Reasons for Net Sales Change  $1.64 billion increase of switch sales – Increased adoption of unified communications and wireless LANs  $2.47 billion increase of advanced technologies – Increased demand for HD set-top boxes – New FCC regulations Source: CISCO 2007 10-K, Annual Report to Stockholders
  34. 34. © 2006 Cisco Systems, Inc. All rights reserved. 34 SWOT Analysis Strengths  Culture  Market Position  Innovation  Able to spot discontinuities & acquire Weaknesses  Not knowing when to divest  Unsustainable High Gross Margin  High Reliance on Outside Vendors  Sales Forecasting Opportunities  Emerging markets (Eastern Europe, Asia-Pacific)  Unified Communications  TelePresence  School education initiative  Healthcare IT Threats  Unseen competitor from China  Increased Competition  Uncertain Global Economy  Variability of Revenues Source: Team Developed and Brian Dal Bello, Director of Product Marketing, Cisco Systems, Inc.
  35. 35. © 2006 Cisco Systems, Inc. All rights reserved. 35 Value-Chain Analysis General Admin M argin M argin HR Mgmt Tech/R&D Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service Collaboration, New Tech Incubation, Mergers & Acquisitions Frugality, economy of resources Adherence to Six Sigma standards - Wide variety - Broad coverage - Strong relations with distribution partners Contract manufacturers to meet production requirements while integrating lean manufacturing processes with suppliers Maintain connectivity with suppliers through logistics networks Continuing reliance on alliance partners and distributors Outsourced to Manpower/Spherion SupportActivities Primary Activities - World-Class Abilities - Efficient - Always able to meet or exceed sales quotas Source: Team Developed
  36. 36. © 2006 Cisco Systems, Inc. All rights reserved. 36 Porter’s Five Forces Model Competitive Rivalry Nortel Juniper Networks Avaya Microsoft Aruba Networks (Wireless) Customer Bargaining Power Demand for more features Multiple vendor choices Customers can wait to upgrade Can afford to procrastinate Threat of New Entrants Microsoft China, Inc. Offshore Startups Threat of Substitutes Cisco has many products and services in their portfolio. If substitutes enter the market, Cisco can compete, but must closely monitor margins Vendor Bargaining Power Cisco makes up the majority of vendor revenues, therefore the threat is minimized. Source: Team Developed
  37. 37. © 2006 Cisco Systems, Inc. All rights reserved. 37 Target Market Analysis  Carrier Services – Networks, Routers, Switches  Major Markets – China, India and Russia  Wireless – WiMAX – Broadband coverage to entire city  Digital Services Source: “Future of Technology,” http://www.youtube.com/watch?v=12_oEMRVuiA
  38. 38. © 2006 Cisco Systems, Inc. All rights reserved. 38 Customer Activity Cycle Pre-Purchase Customer • Proof of added value • Compatible, scalable solutions Cisco • Customer proof of concept • Revenue generation forecasting based on future customer needs Purchase Customer • Flexible purchasing options • Service level agreements • System implementation support Post-Purchase Customer • Product support • Network implementation support • Continued training Cisco • Cisco networking academy program • Technical assistance center • NetPro community Source: Team Developed Cisco • Dedicated sales force sell to enterprise/ISPs • Value added resellers sell to SMBs • Mass merchandisers sell to home and small office users
  39. 39. © 2006 Cisco Systems, Inc. All rights reserved. 39 Consumer Activity Cycle Pre-Purchase Consumer • Research feature and benefits • Compare to competitors • Rank warranty specifications • Assess network compatibility Cisco/Linksys • Linksys Learning Center Post-Purchase Consumer • Warranty coverage • Customer service • Training Cisco/Linksys • Rebates •Technical Support Cisco/Linksys • Marketing and Promotion • Customer awareness • Surveys Purchase Consumer • Price • Substitute Products • Quality (MTBF)Source: Team Developed
  40. 40. © 2006 Cisco Systems, Inc. All rights reserved. 40 Mobile Broadband Widely Deployed • High-speed WiFi (802.11n) • High bandwidth connections • WiMAX and 4G cellular are emerging • FCC to auction off 700MHz bandwidth-2008 Thin clients on every device • Devices are generic browsers, with some data caching • Data lives in the network, fully backed up and secured One device does it all Applications, communications, Full context and identity - “digital me” Converged Technology User friendly Works together seamlessly Collaborative Workspaces • Productivity in a flat world • Time shifted, distance-independent • TelePresence /virtual meetings – greening measures Source: Internal Presentation, Cisco Systems “CTO Vision for Unified Communications”, 2006 Future Trends & Discontinuities
  41. 41. © 2006 Cisco Systems, Inc. All rights reserved. 41 Future Customer Expectations Mobility Do anything anywhere Hands free devices Interactive voice recognition System Interoperability Facilitation for app-to-app communications Applications from applications Open Source as the wellspring of creativity Thin Client Technology Google leading change Customizable Users write the rules Security Complete security Transparent to users Enhanced Email Functionality More collaborative Universal access Contact management Source: Internal Presentation, Cisco Systems “CTO Vision for Unified Communications”, 2006
  42. 42. © 2006 Cisco Systems, Inc. All rights reserved. 42 Future Customer Expectations Strategic Intent Model Current Competencies Targeted Future Competencies  Increasing cost  Increasing competition  Technology advancements  Backward non-compatibility  Shortage of professionals  Global Brand Management  Customer Value Management  Employee Value Management  Market Management  Mobile Networking  Cross platform compatibility  Multimedia connectivity  Wireless Connectivity  Acquisition Management  Product Lifestyle Management  Innovation Management  IT Solution Management Future Discontinuities Trends Source: Team Developed
  43. 43. © 2006 Cisco Systems, Inc. All rights reserved. 43 Competencies Acquisitions Customer Support Mgmt. Innovation Mgmt. Brand & Market Mgmt. IT Solutions Mgmt. Portfolio Mgmt. Prod. Develop. Customer Expectations & Trends Relative Importance Product Support 11 1 3 0 1 3 3 0 Network Security 14 3 2 2 0 3 2 2 Revenue Generation forecasting 13 3 0 3 0 1 3 3 Implementation Support 8 0 3 1 0 3 1 0 Unified Networking 16 2 2 3 0 3 3 3 TOTAL 62 9 10 9 1 13 12 8 Consumer Expectations & Trends Training 9 0 3 0 1 3 1 1 Warranty coverage 6 1 2 0 1 1 1 0 Pricing 13 2 1 2 3 0 2 3 Mobile Networking 14 3 1 3 0 2 3 2 Quality of Service 17 2 2 3 2 2 3 3 TOTAL 59 8 9 8 7 8 10 9 17 19 17 8 21 22 17 Current Competency Validation Source: Team Developed
  44. 44. © 2006 Cisco Systems, Inc. All rights reserved. 44 Current Competency Grid Low Competitors Fear High 10 8 6 4 2 4 2 6 Core 108 Customer value Contracted Corporate Low High Distinctive Core Corporate Contracted ● ● ● ●● ● ● Distinctive ● Acquisition Mgmt. ● Product Lifecycle Mgmt. ● ● Innovation Mgmt. ● Brand & Market Development ● IT Solutions Mgmt. ● Production Mgmt. ● HR Management ● Portfolio Mgmt. ● Product Development ● Source: Team Developed
  45. 45. © 2006 Cisco Systems, Inc. All rights reserved. 45 Distinctive Core Corporate Contracted Acquisitions The Competency Continuum Source: Team Developed Product Lifecycle Management IT Solution Management Production Management Portfolio Management HR Management Product Development Innovation Management Brand & Market Development
  46. 46. © 2006 Cisco Systems, Inc. All rights reserved. 46 Future Recommended KPI’s Return on Net Assets Return on Net Assets Employee Productivity Employee Productivity Dollar Value of Sales Dollar Value of Sales Greening Initiatives Greening Initiatives Acquisition ROI Acquisition ROI Product Quality Product Quality Inventory Turnover Rate Inventory Turnover Rate Net Payback Period Net Payback Period Time to Market Time to Market Source: Team Developed
  47. 47. © 2006 Cisco Systems, Inc. All rights reserved. 47 Current Strategy and Focus of Cisco Source: Cisco 2008 Initiatives Lead the NEXT evolution wave of the internet (Web 2.0) by innovating and creating new markets, specifically: Grow 8 Advanced Technologies to produce more than $3B in sales Examples: – Mobility/Wireless – Data Center/Storage – Unified Communications – Optical – Security Develop 8 additional Emerging Technologies Examples: – Video security – TelePresence – Video media/Content Mgmt. – WAAS (Wide Area Applications Services) – IPICS (IP Interoperability and Collaboration Systems
  48. 48. © 2006 Cisco Systems, Inc. All rights reserved. 48 Current Strategy and Focus of Cisco (Cont.)  Implement 18+ cross-functional investments – Collaboration amongst Cisco’s internal business councils Examples: – Retail – Legal – Manufacturing – Commercial – Service Providers – Small-to-Medium Business – Consumer
  49. 49. © 2006 Cisco Systems, Inc. All rights reserved. 49 Cisco’s Future Outlook and Strategies Future Outlook  Utilize technologies such as Unified Communication and TelePresence  Technology architecture approach to enable gains o Market share o Sustainable competitive advantage o Greater share of customer IT budgets Strategies  Identify, invest and position to capture customer-driven market transitions  Constant innovation enables building, buying and collaborating with partners who also improve productivity and quality  Differentiated market approach to tie together technology business architectures  Cross-functional teamwork and initiatives to drive execution across products, value-added services, customer segments and geographic theatersSource: http://www.cisco.com/web/about/ac49/ac20/ac19/ar2007/letter_to_shareholders/index.html
  50. 50. © 2006 Cisco Systems, Inc. All rights reserved. 50 Source: Team Developed  Integrate WebEx technology with TelePresence to create new functionality and additional revenue  Collaborate with potential acquisitions and promote incorporation of Web 2.0, TelePresence, and Cisco’s overall strategic direction  Lead the market in producing digital-to-analog converter boxes through Scientific Atlanta (a guaranteed and subsidized market)  Invest in R&D to develop innovative products to transform current healthcare systems (home monitoring of patients) Future Recommendations
  51. 51. © 2006 Cisco Systems, Inc. All rights reserved. 51 Future Recommendations (Cont.)  Must continually press U.S. government/FCC to do more to expand network infrastructure bandwidth – New applications depending more and more on video, UC, etc. – Current broadband capabilities insufficient to handle future traffic – U.S. substantially behind other countries in delivery of broadband  Expand “Green” initiatives internally –Will cut travel expenses by 20% starting 2008  Expand “Green” investments externally –Connected Urban Development –Reduces carbon footprint of cities
  52. 52. © 2006 Cisco Systems, Inc. All rights reserved. 52 Future Recommendations (Cont.)  Fully exploit WiMAX technology – Already taken initial step with acquisition of Richardson based Navini Networks – WiMAX technology will be deployed on next generation of laptops – By 2012, ABI Research predicts approx. 95 million WiMAX subscribers and 200 million mobile devices equipped with the technology Source: Team Developed
  53. 53. © 2006 Cisco Systems, Inc. All rights reserved. 53 References  CISCO 2007 10-K, Annual Report to Stockholders  http://newsroom.cisco.com  http://www.cisco.com/en/US/products/index.html  http://www.cisco.com/en/us/products/hw/routers/index.html#,hide-id-trigger-g1-enterprise  http://www.cisco.com/en/us/products/hw/routers/index.html#,hide-id-trigger-g1-sp  http://www.cisco.com/en/us/products/hw/routers/index.html  http://www.cisco.com/en/us/products/ps6120/index.html  http://www.cisco.com/en/us/products/ps6513/index.html  http://www.cisco.com/en/us/products/ps7087/index.html  http://www.cisco.com/CustAdv  http://www.cisco.com/en/us/products/products_services_index.html  http://www.reuters.com/investing  http://www.wimax.com/education  “Future of Technology,” http://www.youtube.com/watch?v=12_oEMRVuiA  Cisco Internal Presentation, “CTO Vision for Unified Communications” 2006  http://www.cisco.com/web/about/ac49/ac20/ac19/ar2007/letter_to_shareholders/index.html  http://www.webex.com/smb/web-meetings.html  http://www.theregister.co.uk/2006/09/22/Cisco_goes_green  Dal Bello, Brian - Director of Product Marketing, Cisco Systems, Inc. Personal Interview. 8 October 2007  Starr, Doug - Systems Engineer, National Channels, Cisco Systems, Inc.  Team Developed Source: Team Developed
  54. 54. © 2006 Cisco Systems, Inc. All rights reserved. 54

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