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Cisco appoints first COO to kickstart growth

The explosion of internet and video traffic can only boost demand for Cisco’s key products, its switches and routers, but its last quarter marked the

By PETER WHITE

Published: 24 February, 2011

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The explosion of internet and video traffic can only boost demand for Cisco’s key products, its switches and routers, but its last quarter marked the first one when these generated less revenue than its newer businesses. Reinforcing the gradual shift of emphasis towards high growth sectors like wireless, Cisco has named its first ever chief operating officer, charged with accelerating that expansion of the business.

Gary Moore, a 10-year veteran of Cisco, has most recently been EVP in charge of the services unit, but now also takes on engineering, marketing and operations, as a second-in-command to CEO John Chambers. Some see the move as a sign that Chambers, who has been in the top spot for 15 years, is too entrenched in the traditional business to respond to new opportunities, though the CEO initiated the reinvention of Cisco back in 2003 when he identified six key emerging product categories to chase. These were expanded to 30 businesses, all IP-related, in 2009.

Nor is Moore necessarily regarded by Wall Street as Chambers’ natural successor. The CEO said in a statement: "I have tremendous confidence in Gary's ability to align Cisco's world class innovation engine with industry leading operational practices to drive and extend the next generation of Cisco's market leadership."

In its second fiscal quarter, new products and services brought in more revenue than routers and switches, though the swing may be temporary, with switches hit by a product transition period. However, the strong growth areas indicated the shape of the new Cisco – mobility, collaboration, video and the data center. The risk of pursuing so many markets is spreading the company too thin and losing its legendary effectiveness as a sales machine – Moore’s key role is likely be to prevent such an outcome and bring operational excellence to all the growth units.

Cisco has considered appointing a COO for the past five years to ensure diversity of activities does not turn its uniquely distributed management structure into chaos. The company’s much studied system sees executives serving on multiple committees and dealing with different projects, but Moore will provide a single point of coordination for old and new activities.

The new ones, outlined in 2009, aim to build on Cisco’s strengths in IP video and traffic, boosting currently sluggish switch and router sales while creating new revenue streams too. The first six new directions were wireless, optical, home networking, storage networking, IP telephony and security. The first of these has included consolidation of its market lead in consumer and enterprise Wi-Fi; an intensified focus on selling IP core networks to 3G, 4G and converged carriers, including the acquisition of a packet core with Starent; and even a possible shift towards a wider range of wireless IP end user devices, such as tablets and video cameras.

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