Cisco will be hard pressed to match 2009

A look at this year's achievements and what is on the cards for the networking giant in the new year

2009 started with a bang and ended with a bash for Cisco.

The company entered the data center blade server market in the beginning of the year and ended the year with two acquisitions worth a combined $US6.3 billion. The acquisitions made Cisco the market leader in videoconferencing and allowed it to address the LTE market for 4G mobile Internet applications.

Tech industry's biggest M&A deals of 2009

Cisco also ended 2009 by celebrating its 25th anniversary.

So Cisco entered at least three new markets in 2009. Sandwiched in between were some significant events designed to keep the company at the forefront of the industry, such as smart grid initiatives for cities and homes; the purchase of a pocket camcorder company to drive bandwidth-consuming video traffic; a significant refresh of its wildly successful branch router line; and formation of a joint venture company with EMC to accelerate adoption of their respective data center products.

"It was a pretty enlightening year," says Catharine Trebnick of Avian Securities, who attributes Cisco's multidimensional advances to the company's management-by-council structure.

"When you do four acquisitions in a quarter -- two of them multibillion dollar -- you really do have to have your teams moving in a couple of directions. And you have to coordinate them. That's a perfect example of how they've been utilizing cross-functional teams."

January saw Cisco make a major move into digital home entertainment, long the domain of Sony and Apple. The company rolled out the Linksys Wireless Home Audio and Media hub system, and an operating system, called EOS, specifically for digital media and entertainment.

The moves are intended to make Cisco a leading provider of Internet-based content, media and entertainments platforms.

Cisco also acquired Richards-Zeta Building Intelligence, a provider of middleware that enables businesses to integrate building infrastructure and IT applications.

In February, Cisco made the first of its smart buildings/cities moves for the year by introducing the "intelligent urbanization" blueprint for integrated city management.  The blueprint proposes using a Cisco network as a utility for public safety and security, transportation, buildings, energy, healthcare and education.

March saw perhaps Cisco's most ambitious and controversial product launch ever: the Unified Computing System, an integrated network, server, virtualization and storage access platform that ushers Cisco into the blade server market. UCS strains relations with longtime partners and server vendors HP, IBM and Dell -- especially HP, as its own server/network/virtual connect play takes a direct hit. But Cisco believes the UCS proposition is so compelling that it's willing to forego about $US2 billion in annual revenue from the server OEM channel for the eventual payback from UCS.

Another ambitious move was made in March with the purchase of Pure Digital, maker of the Flip handheld video recorder. Cisco's hoping the $US500+ million investment will deliver some payback as video traffic fills network capacity and necessitates infrastructure upgrades. Currently though, Flip is a one-trick video pony -- it faces competition from smartphones, such as the iPod and BlackBerry, that can do the same thing and more.

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Jim Duffy

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