If it lacks a cutting-edge technology, Cisco often waits until the category starts to hit maturitythen swoops in and sinks its talons into an innovative startup in the field. Why spend R&D money hatching your own babies when you can have the pick of the market's fledglings?
In March, Cisco followed that modus operandi in buying Airespace, a 175-employee wireless switch startup, for $450 million. "Cisco might be a little slow out of the gate," says Jon Campbell, director of network services at FirstHealth of the Carolinas, a health services provider in 12 counties in North and South Carolina. "But they always seem to come back and jump over the competition rather quickly to overcome the deficit." Cisco plans to merge the Airespace technology with its current wireless networking products, which are the offspring of its 1999 acquisition of Aironet Wireless Communications.
Some Airespace customers have mixed feelings about Cisco's takeover. Mike Smith, CIO of Lee Memorial Health System, installed more than 100 Airespace access points at the company's three hospitals in southwest Florida in late 2004. "The good news is there are more resources to develop the Airespace technology," he says. "The bad news is that you become a commodity as a [Cisco] customer."
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Longtime Cisco shops, though, say the company is very responsive. "If I have an issue, I call up my guy at Cisco, and boomthey're on it," says Darrell Walery, director of technology for Consolidated High School District 230 in Chicago's southwest suburbs.
But Cisco is also known for jacked-up prices. When Rod Luck, vice president of information technology at Pechanga Resort & Casino in Temecula, Calif., was evaluating wireless network equipment in 2003, Cisco's products cost about twice 3Com's. "The price/performance [ratio] with 3Com was much better," he says.
Others say putting their chips on Cisco is the safe bet. "For me, there was really no other option," says Brad Bourland, director of procurement and technology for the Houston Astros, who oversaw the rollout of a Cisco wireless network at the team's stadium last summer. "You can feel comfortable that Cisco has solid products, and that the company's going to be here tomorrow." Probably sniffing the wind for yet another acquisition, too.
170 W. Tasman Drive
San Jose, CA 951
TICKER: CSCO (NASDAQ)
VP & GM, Wireless Networking Business Unit
Joined Cisco in 1995 after the acquisition of Grand Junction Networks, an Ethernet switch maker. Prior to that, he worked at Sun Microsystems, Hewlett-Packard and Cray Research.
VP & GM, Wireless Networking Business Unit
Runs the business unit jointly with Leonard. He came to Cisco in March with the acquisition of wireless switch startup Airespace, of which he was president and CEO. Previously co-founded Packeteer, a maker of bandwidth-management devices, in 1996.
Aironet 1200 (designed for office environments) and Aironet 1300 (for outdoor use) access points are compatible with the 802.11g wireless standard. The Airespace-developed 1000 Series Lightweight Access Points, managed via a central controller device, can continually scan for unauthorized access attempts.
FirstHealth of the Carolinas
Dir., Network Services
Project: Health-care system runs 210 Aironet 1200 access points at three hospitals, providing access for laptops, bar-code readers and wireless phones.
Dir., Technical Services and Operations
Project: Office furniture maker gives employees wireless access via about 150 Cisco access points at two Michigan facilities.
Dir., Procurement and Technology
Project: Major league baseball team provides fans Internet access via 100 Cisco wireless access points over 29 acres at the team's 40,000-seat stadium.
Project: Travel services company uses 50 Aironet 1200s at its five major U.S. offices to give employees access to the internal network and let visitors get on the Internet.
Senior Mgr., Voice and Data Networks
Project: Network of seven Florida hospitals provides doctors and nurses wireless access to a Siemens Medical Solutions system via 375 Aironet 350 and 1200 units.
Consolidated High School District 230
Project: Suburban Chicago school district with 9,000 students has 300 Aironet 340 and 350 access points at its three high school campuses.
Executives listed here are all users of Cisco's products. Their willingness to talk has been confirmed by Baseline.
Cisco operating results*
|Earnings per share
*Fiscal year ends in late July; FYTD reflects first nine months
Source: company reports
Total assets - $33.97B
Stockholders' - equity $23.76B
Cash and equivalents - 2.64B
Short-term investments - $2.40B
Long-term debt - None
Shares outstanding - 6.54B
Market value as of 5/27 - $126.5B
**As of April 30, 2005, except as noted