The Ashimmy Blog: Is the sun going down on the Cisco empire?

For a long time it was very fashionable to dump on and talk trash about the two pre-eminent tech monoliths, Microsoft and Intel. AMD was making competitive products and stealing market share from the mighty Intel. Steve Ballmer is no Bill Gates and everyone was counting the days, weeks and months until Windows was no longer the dominant computing platform (not to mention Office). But you hardly heard a peep about any chinks in the armor of the 3 great tech oligarchy, Cisco. Cisco’s stranglehold was unassailable. Yeah Juniper has good routers and security and even rolled out a switch line, but come on now. Juniper and the rest of the competition are the seven dwarfs compared to Cisco. But now like the Roman Empire Cisco maybe vulnerable and like the Roman empire it is a result a rot from the inside and pressures from the outside.

From the inside there has been much written about a “life changing” conference John Chambers attended that led him to restructure Cisco’s management from a traditional top down model to a management by committee model. Everything is now decided by a series of committees. Just as Democracy may be much more inefficient then dictatorship type of governing, management by committee is equally as inefficient. This has caused Cisco to become even slower to respond and more lumbering than a company there size would be normally. This has caused many including Henry Blodgett to question whether John Chambers has lost his mind.

In the meantime the competition has gotten better. HP has finally awakened to the fact that they have a switching division within the company. They have put the corporate wood behind ProCurve. They have the resources to take Cisco on and are doing it every day as Brad Reese from the Cisco subnet on Network World points out. IBM also seems to have moved from the partner to the competitor column. These are not small companies. It seems they are really putting a dent on Cisco, while Juniper and even Extreme Networks and 3Com continue to move. Even a revitalized, private Enterasys is gaining momentum. In the meantime Cisco announced an earnings decrease of almost 50%. Om Malik asks if competitors are eating into Cisco’s core switching business.

It does truly seem like a perfect storm for Cisco. How they whether it and who the ultimate winners are here is of major importance to just about everyone in the IT space!