(March 14, 2009) - Cisco's January sales were down 20% from a year ago. Its customers are holding off their purchasing decisions under the current economic climate. The only growth potential the company has today is in the virtualization market, which is expected to increase by more than 40% in 2009.
Cisco is not exactly a software company. Like Dell they need to come up with a sustainable proposition for their customers. So far what we have seen from Cisco is a virtual router. The word on the street is that next week they are expected to announce their game plan, perhaps a virtualization product and solutions portfolio in partnership with VMware. Cisco owns 2% of VMware. The big chunk of VMware is owned by its parent EMC. The only meaningful way for Cisco to get a sizable chunk of the Virtualization market in the long run would be through acquiring EMC.
The public statements by the EMC CEO last week about how much EMC cares about VMware could be a possible indication that Cisco might have already approached EMC about how much synergy exists between the two companies. (In plain English this translates into: "We need your toys to grow Cisco's business and we have enough cash in the bank to buy you. What do you say, shall we sit down and talk about this?")
One suggestion to "Mr. Nice Guy John Chambers" would be to have a breakfast meeting with Larry Ellison before his romantic dinner with EMC's Joe Tucci. The drama which comes out of Ellison's bloody approach to these matters is always more fun to watch. They can of course still put together an attractive retirement package for Tucci as the two Microsoft cronies Paul and Tod really move to the driver's seat and the spotlight they have been waiting for under John Chambers.
Hey you never know, if the virtualization business really takes off then Paul can make a move to Chambers' seat. We have seen this happen many times in history, Mitchell Kertzman taking over the helm at Sybase from its founder Mark Hoffman after Sybase's Powersoft acquisition is one of them. :-)
About Fuat Kircaali Fuat Kircaali is the founder and CEO of SYS-CON Media. Kircaali came to the United States from Zurich University, Switzerland, in 1984, while studying for his PhD, to design computer systems for SH-2G submarine hunter helicopters for the U.S. Navy.
He later worked at IBM's IS&CG Headquarters as a market research analyst under Mike Armstrong's leadership, an IBM executive who later ran IBM Europe and AT&T; and Fuat was the Director of Information Systems for UWCC, reporting to CEO Steven Silk, one of the top marketing geniuses in the country.
Kircaali founded SYS-CON Media in 1994, a privately held company with sales exceeding $100 million. SYS-CON Media was listed twice by Inc 500 and Deloitte and Touche as one of the fastest-growing companies in North America. Kircaali launched Ulitzer, Inc. new media company in mid 2009.
He completed Bogazici University Business Administration program in 1982 with a Bachelor's Degree. He was one of 50 students accepted to the program out of over 1 million high school graduates.
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