Cisco 2011 Annual Report Download - page 10

and opportunities—improving productivity and user experience, reducing costs, and gaining a competitive
advantage—and to help them connect more effectively with their key stakeholders, including their customers,
prospects, business partners, suppliers, and employees. We deliver networking products and solutions designed to
simplify and secure customers’ network infrastructures. We also deliver products and solutions that leverage the
network to most effectively address market transitions and customer requirements—including in recent periods,
virtualization, cloud, collaboration, and video. We believe that integrating multiple network services into and
across our products helps our customers reduce their operational complexity, increase their agility and reduce
their total cost of network ownership. Our product offerings fall into the following categories: our core
technologies, Routing and Switching; New Products; and Other Products. In addition to our product offerings, we
provide a broad range of service offerings, including technical support services and advanced services. Our
customer base spans virtually all types of public and private agencies and businesses, comprising enterprise
businesses, service providers, commercial customers, and consumers.
Our products are used individually or as integrated offerings to connect personal and business computing devices
to networks or computer networks with each other—whether they are within a building, across a campus, or
around the world. Our breadth of product and service offerings across multiple technology segments enables us
to offer a wide range of products and services to meet customer-specific requirements. We also provide products
and services that allow customers to transition their various networks to a single multi-service data, voice, and
video network, thereby enabling economies of scale.
Network architectures, built on core routing and switching technologies, are evolving to accommodate the
demands of increasing numbers of users, network applications and new network-related markets. These new
markets are a natural extension of our core business and have emerged as the network has become the platform
for provisioning, integrating and delivering an ever-increasing array of IT-based products and services.
We announced a plan in May 2011, which we began implementing in fiscal 2011 and expect to complete in fiscal
2012, to realign our sales, services and engineering organizations in order to simplify our operating model and
focus on our five foundational priorities:
• Leadership in our core business (routing, switching, and associated services) which includes
comprehensive security and mobility solutions
• Collaboration
• Data center virtualization and cloud
• Video
• Architectures for business transformation
We believe that focusing on these priorities will best position us to continue to expand our share of our
customers’ information technology spending.
We are currently undergoing product transitions in our core business and introducing next-generation products
with higher price performance and architectural advantages compared to both our prior generation of products
and the product offerings of our competitors. We believe that many of these product transitions are gaining
momentum based on the strong year-over-year product revenue growth across these next-generation product
families. We believe that our strategy and our ability to innovate and execute may enable us to improve our
relative competitive position in many of our product areas even in uncertain or difficult business conditions and,
therefore, may continue to provide us with long-term growth opportunities. However, we believe that these
newly introduced products may continue to negatively impact product gross margins, which we are currently
striving to address through various initiatives including value engineering, effective supply chain management,
and delivering greater customer value through offers that include hardware, software, and services.
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