Executive Thought Leadership

Acquisitions and Partnerships Core

Acquisitions and partnerships remain a core competitive differentiator for Cisco, and a key part of Cisco's growth strategy going forward. Continued focus on our customers and their needs is a major driver behind both our acquisition and partnership strategies. We are very focused on making our customers successful with full, robust, and secure solutions for their network needs. This is not only a key part of our mission but a critical part of the decision criteria at Cisco. Since the early days at Cisco, acquisitions and partnerships have been a significant part of our balanced portfolio and a compliment to Cisco's strong internal engineering and R&D capability which continues to produce market leading solutions for customers throughout their network.

In addition to our internal development capabilities, Cisco looks for growth through a strategic program of acquisition and partnering. Since its very first acquisition, Crescendo Communications, Inc. , Cisco chose to enter some growth markets using acquisitions. Cisco has developed unique competences in sourcing, closing, and integrating companies which give us a core competitive advantage over our competitors. Recently, given the market downturn, Cisco has been able to observe the development of several growth markets prior to entry. This helps reduce Cisco's risk and assure our customers of the delivery of more robust product.

Cisco's recent entry into a new growth market was the announced acquisition of market leading Andiamo Systems, Inc. Andiamo, focused on Fibre Channel Storage Area Networking (SAN) market, developed the storage industry's first family of multilayer intelligent storage switches. Cisco began working with Andiamo early in its existence to architect a market leading switches for the storage market that offer enterprise customers the same levels of network scalability, performance, and manageability to storage networking that Cisco pioneered in LAN and IP networking. Andiamo's solutions fit well in the market and compliment Cisco's existing core products. (A critical requirement for any acquisition)

Given the current dynamics of the SAN market, Cisco and Andiamo structured the transaction in a unique way designed to provide value for both players. The final closing price for the acquisition is based on a number of variables, not just the traditional, "introduction of the first product". Therefore, Andiamo's shareholders are rewarded based upon success in the market. This offers the significant opportunity for upside reward to all involved as the market for SAN solutions takes off.

Over the years, Cisco's acquisition and partner strategy has continued to be a successful part of our overall took kit for addressing growth markets. It's understanding the dynamics of these markets that inspires Cisco to be creative in its strategy. Constantly striving to improve the process and evaluating the strategy regularly ensures that we will continue to provide the market with leading edge solutions that add differentiating value for our customers, new capabilities to the industry, and acceptable profit margins to our shareholders.