In his keynote presentation to Cisco Live in Las Vegas earlier today, Cisco CEO John Chambers repented for his earlier sins against stakeholder value and vowed to make amends.
A few short years ago, Chambers’ word would have been his bond, and his bonds would have traded at high value on any market. These days, Chambers’ words are met with skepticism.
If John Chambers has lost some luster, so has his company. Cisco had been the worst-performing Dow stock this year until it staged a mild rally and edged past Bank of America earlier today. Even Ralph Nader, who is a Cisco shareholder as well a consumer activist, is unhappy with the company’s stock and the stewardship of its CEO.
Cisco customers, partners, suppliers, and investors now know that the networking giant and its braintrust aren’t infallible. That’s okay, of course. We all make mistakes. What’s important is that we learn from the mistakes we make, avoid repeating the same ones, and work diligently to be right more often than we are wrong. When we slip up, we want the miscues to be minor, the successes to be big.
That’s what Cisco and Chambers will try to do now, but one wonders whether they’ve learned the lessons administered during the company’s humbling time in market purgatory.
It wasn’t long ago, just two years back to be exact, that John Chambers was lavishing praise upon the Flip video camera. Chambers proclaimed that the Flip, which came to Cisco through the acquisition of Pure Digital, was — along the video in general — the future of both consumer and enterprise communication.
We all know now that the Flip won’t play a part in Cisco’s future or the in the future of video communication. Cisco killed the Flip, realizing that it was destined to fail against smartphones that increasingly came equipped with video capabilities approximating those of the video-only Flip.
Chambers Says Cius is Hot, but it’s Not
If Chambers had learned from the Flip debacle, one could let him take the mulligan and move on. But I’m so sure the Flip was an aberration. Today, Chambers said the following about an overpriced Android tablet that appears to have much dimmer prospects than the Flip had back in 2009:
“You’re beginning to see it (the Cius) launch in volume. I believe this product is going to be really hot.”
I realize that the success or failure of the Cius will not seal Cisco’s fate. The Cius could go the way of the dinosaur, or the Flip, and Cisco would still endure. Cisco’s destiny will turn on how well it defends its core markets while finding and sustaining growth in, yes, those much-maligned market adjacencies. All the while, Cisco will have to outmaneuver competitors in adjusting to ongoing virtualization, cloud computing, increased mobility, and the growing cost-consciousness of enterprise and service-provider technology buyers in developed markets. It’s a daunting challenge.
Cisco doesn’t need doomed distractions like the Cius. What’s more, what Cisco is trying to do with Cius — selling tablets to corporate IT departments to foist on their employees — goes against everything that we’re seeing today in the marketplace. The Cius lacks consumer appeal, does not run the latest tablet-optimized version of Android, is overpriced, has a less-than-optimal seven-inch display, and isn’t really designed to be anything more than a mobile access point, or adjunct, for Cisco’s proprietary collaboration and Telepresence technologies. It goes completely against the grain of the seemingly inexorable wave of IT consumerization.
It feels, well, outdated, like something an out-of-touch legacy vendor would try to force down the throats of its customers, failing to recognize that the rules and the game have changed.
Maybe Chambers was just switched to autopilot cheerleader mode and he was giving everything, including the Cius, the pitchman’s hard sell. In this case, one hopes he isn’t buying his own bluster.