Cisco is Exiting the Phone Business

With the news of the Cisco restructuring, and the lack of any intimation that they will continue to develop their Enterprise Communications suite, it becomes apparent that Cisco is exiting the phone business.

The attraction of Cisco has always been their rock solid reliability when running their hardware end to end. It was a devastatingly effective market strategy: disregard interoperability, acquire customers. The problem with Cisco has never been their hardware, it is a mentality.

Cisco built their reputation making amazing switches and routers that handled incredible amounts of traffic at the end of networks. They, in turn, applied this set of ideas to other areas of business, like IBM, but with networking hardware. The result was many years of prosperity, and while I won’t question Cisco’s engineering talent, I can confidently say that they were spread too thin. Too much marketing and not enough substance. Cisco shouldn’t have acquired Linksys or Flip Cameras (especially Flip), and they should have spent the necessary Research & Development dollars to develop the next generation of business networking.

Right now, Cisco is in the fight of its life for survival. This is the greatest challenge the company has ever faced. By reducing to their five core markets, Cisco has the potential to become competitive in the new frontier of technology.

Which brings me back to my original point: Cisco is exiting the Phone Business. By omitting any mention of voice or telephony or unified communications, Cisco is, in effect, bowing out of those markets. This omission is intended to give them time to unwind their business, which will take a few years. I expect that there will be a surge in purchasing of other Enterprise Hardware solutions, but at the same time, new entrants to the market will have an opportunity to acquire business that only happens during the vacuum created by a major competitor exiting.

Look for Avaya and Shoretel to do well, but also look for Virtual and Hosted PBX deployments to perform above expectations. Some of the largest call centers in the world will have impending hardware decisions, and once that Cisco hardware is no longer supported we could see all kinds of creative calling solutions climbing out of the woodwork. Exciting times ahead.

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