December of 1984 was a month filled with notable moments. China’s Premier Zhao Ziyang and British Prime Minister Margaret Thatcher signed the Hong Kong Treaty. In the world of sports, Eric Dickerson broke OJ Simpson’s NFL rushing record and Doug Flutie won the Heisman trophy. In entertainment circles, Madonna’s “Like a Virgin” hit No. 1, launching the Material Girl’s phenomenal career. And, in the technology world, Cisco Systems was born, kicking off one of the most unprecedented eras of growth that the business world has ever seen.
Back in 1984, very few people had actually heard of the internet. Personally, I had just started my undergrad program at the University of Victoria in British Columbia, Canada. As a computer science student, we were all given internet accounts on a Unix mainframe. I had access to telnet, email through a program called “elm,” ftp, and an awesome application called read news so I could keep up with other Star Trek and Dungeons and Dragons geeks.
Very few could have predicted the rapid growth of the internet and the impact it would have on society. But one company that did was Cisco. Two years after the company was founded, it launched its first product - the Advanced Gateway Services (AGS) Router. The fact that the AGS was a multi-protocol router was key to its success, as IP hadn’t won out yet as the dominant protocol. In the late 80s, there were many LAN protocols, and Cisco built the first product that could make disparate networks that use different protocols talk to one another.
The multi-protocol router certainly gave Cisco a running start. However, it was the hiring of John Chambers in 1995 as the company’s CEO that gave Cisco the ability to continually “see around the corner” and predict a future where a small router vendor would turn into a company that will exceed $50 billion in revenue this fiscal year.
Here are some of the best examples of Cisco’s ability to predict the future over the past 30 years.
Committing to the router
Cisco certainly dominates the router market today, but it wasn’t always that way. In the early 90s, 3Com, Bay Networks, and other vendors had strong router businesses. However, there was a time when many people believed that the router was going away in favor of switches that had routing capabilities. In fact, I remember a conversation I had with my Cabletron rep where he mentioned that Cabletron had considered acquiring Cisco but was convinced the router was dead. By the mid-90s, Cisco was the only viable router company, giving it a foothold in almost every enterprise customer. To this day, the branch router remains the single toughest product in the networking industry to compete with.
Betting that IP would be the single, dominant protocol
This seems obvious in hindsight, but it wasn’t always the case. I grew up as an “IP-first” engineer, so it seemed like a no-brainer to me, but I had some heated arguments with co-workers about SNA, IPX, and other competing technologies versus IP. Eventually, all vendors that supported competing protocols, such as Novell (IPX) and IBM (SNA), started supporting IP, and that further strengthened Cisco’s position.
Predicting that voice would become VoIP
This was a huge bet that Cisco made. In the mid-90s, Chambers made a bold prediction that eventually all communications would be done over IP and that voice would eventually be free. The telcos and legacy TDM companies like Lucent and Nortel guffawed over this sentiment and said IP just couldn’t deliver the quality and reliability that people expected from voice. In fact, that statement was taken so negatively by some of the service providers that a few of them stopped doing business with Cisco for a brief period of time. However, this prediction came true. Today, voice services cost next to nothing, and Cisco has remained the market leader in VoIP for years.
Understanding the impact of the internet
In the mid-90s, Chambers was quoted as saying the internet would “change the way we work, live, learn and play.” After a while, that almost became Cisco’s unofficial tagline, but the underlying meaning was that the internet would change everything in our lives. For those of you who are in my age demographic or older, you probably remember the debates around the viability of the Internet. Twenty years later, the statement couldn’t be truer. We use the internet for almost everything in our lives, and Cisco has capitalized on every step of the internet’s journey since then better than any company.
Using architectures as a differentiator
In the early 2000s, Cisco came out with its first architecture, AVVID (architecture for voice, video, and integrated data). The idea behind the architecture was that it could simplify the deployment of something complicated by ensuring Cisco stuff works well when connected to other Cisco stuff. I was a consultant at the time and we installed hundreds of end-to-end Cisco VoIP systems because customers believed that the architecture would ensure success – and, most of the time, it did. Since then, Cisco has used the architectural approach with video, data center, storage, security, wireless, service providers and other technologies, which have enabled the company to move into market-leading positions.
Leveraging the value of convergence
When one says convergence, the first thought is normally voice and data. As stated earlier, Cisco certainly leveraged the power of convergence to move into voice, a market in which it had zero share at one time. However, voice isn’t the only market where a converged Cisco product has moved Cisco from no share to market-leading in a short period of time. Cisco’s UCS is a converged blade server/network product that has made Cisco the dominant blade vendor in the server market today. For years Cisco has used the power of convergence to strengthen its security strategy, and the unification of wired/wireless networking has been a key differentiator for Cisco in enterprise Wi-Fi.
Those were some of the forward-looking bets Cisco has made over the past 30 years to become the dominant network vendor it is today. If the company is right about its most recent bets (network-centric IT, Intercloud, Internet of Everything, business outcome-led engagement models) and it executes against these plans, we will see Cisco transform from being the dominant network vendor to a dominant IT vendor. Happy 30th birthday Cisco, and good luck over the next few decades.