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Cisco pulls out the cutting board

Projects, products, programs, panels and people expected to be pared as company embarks on changes foreshadowed in Chambers memo

Among the changes promised by CEO John Chambers in his (intentionally) leaked internal memo this week is curtailed spending in some areas of the company. Where that spending will be cut back though is unclear at the moment, according to this post on the Wall Street Journal blog.

It's no secret that Wall Street is calling for Cisco to cut the cord on its consumer business. Some are even calling for Cisco to exit optical, according to this post by Eric Savitz at Forbes. Optical is a market where Cisco's had less success than more since entering it in 1999.

Cisco's killed a couple of high-profile optical product lines inherited from high-profile acquisitions - the ONS 15900 Wavelength Router from the Monterey Networks purchase, and the ONS 15800 long-haul DWDM line from the acquisition of Pirelli Optical Systems. Even the performance of its Cerent metro SONET/WDM products has been uneven at best over the decade since Cisco acquired the company for close to $7 billion.

Application delivery is another area Cisco should look to exit, according to analysts quoted in the Savitz blog. Cisco's WAAS and ACE appliances usually trail behind F5, Riverbed and Blue Coat in market share and reputation. Indeed, Cisco more and more is looking to virtualize these capabilities as services on its routers and switches - so it's presence in these markets may become virtual as well.

Maybe it should virtualize its consumer and optical businesses as routing services as well...

Analysts also say Cisco should streamline its management structure, according to this report in Bloomberg. In his memo, Chambers mentioned that decision making had become slow, and that execution and operational precision were hobbled. Analysts speculate this is due to the management councils and boards Chambers instituted back in 2007 to instill a more horizontal, less siloed decision making process - especially since Cisco was targeting 30 new markets to get into to accelerate growth.

Cisco might also want to cut back on those 30 market adjacencies. It's hard enough for a management council or board to make decisions among themselves; it's quite another ordeal to have all of those managers decide on which of those 30 markets to aggressively pursue and invest in.

Chambers says Cisco needs to cut expenses in half, according to this story from colleague Matt Hamblen at Computerworld. At the same time, Cisco plans on "doubling down" on five strategic areas: video; data center virtualization; collaboration; architectures; and routing and switching.

Streamlining priorities and operations will undoubtedly have a human toll. So it's likely Cisco will cut people as well as projects.

To that, Chambers said in the Hamblen story:

 "We will handle those with class."

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