Cisco cuts 6,000 jobs due to slowing growth in market

ande0255

Cisco appears to be getting beat up in the market by software based routing solutions:

Cisco Systems (CSCO +0.20%) is cutting 6,000 jobs, or 8 percent of its workforce, as it faces weakness in emerging markets and a slump in demand from telecommunications-s​ervice providers.

The world's largest networking-equipment​ maker had about 75,000 staff at the end of July. Including the latest round, Cisco has eliminated more than 18,000 employees over the past three years.

John Chambers, who is nearing retirement after almost two decades as Cisco's chief executive officer, has been grappling with slowing growth for its market-leading routers and switches. Phone carriers and other large companies are replacing legacy network hardware with software that performs many of the same tasks.

"It's a transition that's inexorable, and it really puts the pressure on Cisco," said Alex Henderson, an analyst at Needham & Co., who has a hold rating on Cisco's stock.

Sales in the current fiscal quarter through October will be $12.1 billion to $12.2 billion, based on the company's forecast for revenue to remain flat or rise 1 percent.

The shares of San Jose, California-based Cisco fell in extended trading. The stock advanced less than 1 percent to $25.20 at the close in New York, leaving it up 12 percent this year, compared with a gain of 5.3 percent in the Standard & Poor's 500 Index ($INX +0.67%).

Market shift
Revenue in the period that ended July 26 was $12.4 billion, the company said in a statement today. That beat the average analyst estimate for $12.2 billion, according to data compiled by Bloomberg. Profit, excluding some items, was 55 cents a share, versus a projection for 53 cents.

Net income in the fourth quarter fell to $2.25 billion, or 43 cents a share, from $2.27 billion, or 42 cents, a year earlier.

Cisco faces a challenging shift as customers move from buying hundreds or thousands of proprietary machines with gross margins of 60 percent or more to software-defined networks that can run more efficiently on cheaper gear. The trend has been embraced by companies including Google Inc. and Facebook Inc.

For the year, Cisco's sales fell 3 percent to $47.1 billion, the first decline since 2009.

Cisco has exited consumer businesses, cut staff and restructured its management in the past three years. The company has come under increased pressure from rivals including Huawei Technologies Co. and Arista Networks (ANET -1.79%) in its main businesses, while newer competitors such as Palo Alto Networks (PANW +4.34%) and FireEye take share in growing markets such as computer and network security.

I have yet to see much in the way of software based network solutions aside from VMware and Cisco Unified Communications products, and Brocade seems to be leaving it's mark in the switching realm as a cheaper solution, but I have yet to see virtualized routing make any sort of foot print in small-medium sized businesses.

Anyone else see this trending in their work environment, or think increase in vendor neutrality and virtualization is going to even the playing field, and possibly even devalue the certifications to employers? Thoughts?

DevilWAH

SDN networking is still in the early days. The like of Google and Facebook can invest in it due to the number of staff and resources they can throw at it.

LAst year I was talking to one of the founders of the SDN movement and he accepted that SDN is in Beta stage at the moment, so a niche market. But it is growing, what is needed is a single standard to be well efined and take hold so that smaller businesses can use it. IF they do this, and having seen it in action I can image SDN will slowly become a big player.

Kai123

What does SDN look like? I'm looking it up now but cant find anything solid.
From an education point of view its not as simple yet as "interested in networking? CCNA".

How beneficial would learning VM software be for a future working in a SDN environment? Or will it be completely different?

DevilWAH

there are various implementation of SDN, But the basic idea is that you don't manage individual devices any more. You have a central management server that you connect all the network devices to.

then on the management console you can make a connection between to end port / network / devices and apply rules to it. So rather than set up ACL's and VLAN's and routing and all the other network stuff at each device. You can simple create a network object in the software and then apply it where you wish.

You can think of it at the moment that very device on the network has its own local configuration, with SDN there is a single network configuration that is stored on the server, and it determines what configuration each device needs to have. But it allows you to do much more reactive things.

For example you can set up triggers for events to limit traffic or reroute traffic on the fly. before this might require you to reconfigure multiple routers on a network, where as SDN you would be able to drag the or click you want to assign specific traffic to. (much like you can drag a route in Google maps to force it to go via a specific location)

Look up openflow for some screen shots but its not really all that interesting, and indeed many current management tools look far prettier. but its the removal of the control from the devices to a central server that is behind the scene that is the big step.

jibbajabba

Kai123 wrote: »

What does SDN look like?

VMware NSX is one of them. Imagine you just need "connectivity" into your virtual platform.

All other networking related tasks (Layer 2 / Layer 3) are dealt with within the vSphere Environment

https://www.youtube.com/watch?v=FHVm69YoKRs

LinuxNerd

This looks like a valuable niche some posters here can focus on and get a great job.

Zartanasaurus

One of my Linkedin connections works sales for a Cisco partner. A few months ago he had a link about the job cuts that Juniper had just announced as if it was some great thing for Cisco. I thought that was funny since Cisco had just done a few round of cuts previous to that. And now this.

Dieg0M

We will see how cisco does in the SDN world with ACI. I think it will be something that will make or break the R&S world for Cisco.

UnixGuy

SDN and the Cloud, the market will look significantly different in the next 5 yrs!

xnx

In the most basic example, SDN involves moving the control plane of switches etc into software, essentially you can centralise control of the devices, it's sort of like virtualisation and instances of different OSs.

You can do security based like software firewall rules etc (Openflow + Floodlight) .. this is one of the things I did at university last year

markulous

DevilWAH wrote: »

there are various implementation of SDN, But the basic idea is that you don't manage individual devices any more. You have a central management server that you connect all the network devices to.

then on the management console you can make a connection between to end port / network / devices and apply rules to it. So rather than set up ACL's and VLAN's and routing and all the other network stuff at each device. You can simple create a network object in the software and then apply it where you wish.

You can think of it at the moment that very device on the network has its own local configuration, with SDN there is a single network configuration that is stored on the server, and it determines what configuration each device needs to have. But it allows you to do much more reactive things.

For example you can set up triggers for events to limit traffic or reroute traffic on the fly. before this might require you to reconfigure multiple routers on a network, where as SDN you would be able to drag the or click you want to assign specific traffic to. (much like you can drag a route in Google maps to force it to go via a specific location)

Look up openflow for some screen shots but its not really all that interesting, and indeed many current management tools look far prettier. but its the removal of the control from the devices to a central server that is behind the scene that is the big step.

That sounds pretty awesome actually. I would love to learn about that. I'm studying for my CCNA now. What cert is closely related to SDN?

lsud00d

Virtual technologies (VMware, Hyper-V) are more related to SDN than current physical hardware manufacturers. I've really enjoyed SDN with Hyper-V, even though it's still more on the basic side than what Cisco technologies can accomplish, but soon enough both the physical and virtual worlds will be jockeying for lead but this time in the networking plane.

hellolin

Where should one start on the world of SDN? I assume a CCNA is still needed as it does not just cover Cisco devices but a lot of it is covering the very basics of how internetworking works, which is what the SDN is build on still. But what should I do after that? VMware classes are so expensive they are almost out of question for self learning, as some poster said here currently there isn't one formal standard of SDN for everyone to learn the same basics like the networking side of stuff..

Blackout

They have come out and told us directly that IT will not be effected by the layoffs. Not sure where the cuts are going to occur.

Blackout

ande0255 wrote: »

Cisco appears to be getting beat up in the market by software based routing solutions:




I have yet to see much in the way of software based network solutions aside from VMware and Cisco Unified Communications products, and Brocade seems to be leaving it's mark in the switching realm as a cheaper solution, but I have yet to see virtualized routing make any sort of foot print in small-medium sized businesses.

Anyone else see this trending in their work environment, or think increase in vendor neutrality and virtualization is going to even the playing field, and possibly even devalue the certifications to employers? Thoughts?

One of the major problems currently going on with software and applications at Cisco is that they can't hold on to design guys for very long.

Until Cisco starts paying top dollar for for their developers and design team they will continue to see their workers poached away by other companies. I know recently we have had a rash of people leaving for companies outside of Cisco, not just lower levels guys but Directors and above as well. People with 15+ years at Cisco.

ande0255

Yes I have a coworker who knows some TAC engineers quite well who hold CCIE's, who live in South American countries, and Cisco is paying them like $20/hour to be like UCCX team leads. He has thought about poaching them as well and putting together his own Cisco support team like an MSP sort of deal, but who knows if it will ever work out.

However, those CCIE's that are top notch Cisco people have expressed interest in leaving for higher pay, so it sounds like Cisco is underpaying from the top all the way down.

Though I still plan to go onto CCNP Voice, NP R/S, then onto IE R/S studies. I don't think those skills are going to lose much if any value at all, but they will be integrated into virtual environments much like Voice already has.

it_consultant

The answer of "it moves the control plane from the switch to the controller" is an oversimplification. While this is true, it is probably the least significant part of SDN, hell we could have done that years ago. The reality is that having the control plane on the equipment is really not the problem we are solving with SDN. What SDN does/is doing is taking apart all of the protocols we have worked so hard to learn. Instead of arp'ing for a port, a SDN controller will simply configure a path for one port to talk to another - or not depending on how everything has been configured. Imagine how this will work out in the highly virtualized datacenter, instead of having to configure the switching/routing and the virtualization separately, the same guy using some software (vSphere, VMM, etc) will turn up a virtual pool or network and VMM will take care of the segregation and security needs without anyone touching the switches. There is a reason that Brocade, Arista, Avaya, Juniper, and Cisco have started to move towards switches which are essentially linux servers with ports running on generic silicon. It paves the way to being able to upgrade to openflow capabilities with simple software upgrades.

lsud00d

Last year at LinuxCon, SDN was HUGE. I sat in on some really interesting talks/demos/vendor discussions regarding the incorporation of the linux OS and the entirety of the TCP/IP stack, not just a subset of a modified kernel to handle networking duties.

the_Grinch

Sort of kills their arguement for more H1B Visas when they keep having round after round of layoffs.

hellolin

Based on some of the posters here, linux skills seems to be essential in the future for SDN right? Right now there are already lots of Linux guys in a different team doing AWS stuff, and none of the guys in my team knows anything about Linux. I am still plan to get my CCNA right now within the next year as SDN won't be taking over that fast just yet, but looks like in the future we all going to go Linux networking, better start getting my hands on that Linux+ book then!

Priston

Blackout wrote: »

They have come out and told us directly that IT will not be effected by the layoffs. Not sure where the cuts are going to occur.

Sounds like you work at Cisco in IT. There is a good chance you sit in the same building as me or the building next to me.

it_consultant

hellolin wrote: »

Based on some of the posters here, linux skills seems to be essential in the future for SDN right? Right now there are already lots of Linux guys in a different team doing AWS stuff, and none of the guys in my team knows anything about Linux. I am still plan to get my CCNA right now within the next year as SDN won't be taking over that fast just yet, but looks like in the future we all going to go Linux networking, better start getting my hands on that Linux+ book then!

Essential. Essential. Essential. It is a skill lacking in a lot of areas where it should be more prevalent. Many popular firewalls are linux forks, every storage system runs a linux fork, SDN capable switches are linux forks, ethernet fabric switches are linux forks, SAN switches are linux forks, many IP phone systems (including Cisco) are linux forks. System admin and network admin are combining, be ready for it.

Blackout

Priston wrote: »

Sounds like you work at Cisco in IT. There is a good chance you sit in the same building as me or the building next to me.

What building are you in?

hellolin

it_consultant wrote: »

Essential. Essential. Essential. It is a skill lacking in a lot of areas where it should be more prevalent. Many popular firewalls are linux forks, every storage system runs a linux fork, SDN capable switches are linux forks, ethernet fabric switches are linux forks, SAN switches are linux forks, many IP phone systems (including Cisco) are linux forks. System admin and network admin are combining, be ready for it.

Sounds like I absolutely needs to at least get my Linux+ just to make sure I have the basic knowledge of it then!