Cisco Systems, Inc
Cisco Systems, Inc. is a prominent American technology company specializing in computer networking. Founded in 1984 by Leonard Bosack and Sandra Lerner, who were inspired by their experiences at Stanford University, Cisco initially focused on developing internetworking routers to facilitate the sharing of information between diverse computer networks. Despite facing early challenges, including copyright violation issues with Stanford, the company quickly established itself as a pioneer in multiprotocol routers, which allowed seamless communication across different hardware and operating systems.
Over the years, Cisco expanded its offerings through strategic acquisitions, enhancing its product portfolio to include technologies related to switching, cybersecurity, and video services. The company went public in 1990 and experienced rapid growth, reaching over $1 billion in sales by 1994 and becoming a leader in the networking industry. By the mid-2010s, Cisco had cemented its position as an industry giant, with revenue nearing $49 billion and a workforce of over 73,000 employees.
Cisco's ongoing commitment to innovation and adaptation has made it a key player in addressing modern challenges, particularly in cybersecurity, as it continues to support businesses in navigating the complexities of digital transformation.
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Cisco Systems, Inc
Company Information
- Date Founded: 1984
- Industry: computer networking; technology
- Corporate Headquarters: San Jose, California
- Type: Public
Cisco Systems, Inc. is an American computer networking and technology company. Two computer analysts, Leonard Bosack and Sandra Lerner, who worked in computer laboratories at Stanford University, started the company in 1984. It grew from an idea about how to connect and share information quickly between computers. However, Bosack and Lerner illegally built a networking system based on the university's router, which led to copyright violation charges and an eventual settlement.
Eventually, Cisco was able to bounce back and become one of the world's leading providers of internetworking router devices. The company developed one of the first multiprotocol routers. These routers enabled computers on multiple networks to link up, even those with different hardware and operating systems.
By the 1990s, the original founders left Cisco and sold their shares in the company. Cisco began to acquire companies and explore newer technologies, where it saw tremendous growth. It continued this success into the 2010s, becoming a worldwide leader in computer networking.
History
A husband and wife team from Stanford University, Leonard Bosack and Sandra Lerner, founded Cisco Systems at the end of 1984 in Menlo Park, California. The two worked at Stanford University but in different departments, and they wanted to devise a way to share information. Bosack managed the computer science laboratory, while Lerner was in charge of the computers in the graduate business school.
Around 1983, Bosack and Lerner illegally used the university's software to build their own internetworking technology. They replicated a version of Stanford's router and then tried to sell their idea. When they had no interest, they decided to start their own business. Stanford colleagues Greg Setz, Bill Westfield, and Kirk Lougheed joined Bosack and Lerner as cofounders of the company. They named the company Cisco Systems as a shortened version of San Francisco, where they originally established the company. Its logo of lines represented the Golden Gate Bridge.
Eventually, Stanford found out about the device and tried to obtain $11 million in licensing fees for the copyright violation and theft since Bosack and Lerner were employed at the university when they built the router. In 1986, Stanford settled for $150,000, free routers and support services, and the forced resignation of Bosack and Lougheed. Lerner had left Stanford previously to focus on starting up the business.
Bosack and Lerner mortgaged their house and used credit cards to establish the company. They had to defer the salaries of their employees and themselves and maintain jobs outside of the business to help pay the bills and get the company up and running. The Stanford settlement did not help matters. Eventually, the company began to make money.
Cisco's focus was the internetworking router, which automatically selected the best route for sharing information between networks. It was built in a way that allowed it to link multiple networks, even those with different hardware, such as IBM and Apple Macintosh computers. By 1986, Cisco became the first company to provide a commercial multiprotocol router for the TCP/IP (Transmission Control Protocol/Internet Protocol) protocol suite.
By the following year, Cisco sold more than $250,000 worth of routers monthly, and the company's sales increased to $1.5 million by mid-1987. At this time, the company was focusing on selling the routers to research entities such as universities and government facilities. It then began to market the devices commercially to corporations that had multiple branches using different networks in numerous locations. It enabled its routers to support multiple protocols, and by the end of the 1980s, it was one of the only companies to offer high-performing multiprotocol routers for a reasonable price.
Although the company had high sales, it still did not have the venture it needed. Bosack and Lerner recruited venture capitalist Donald T. Valentine, who became chairman after acquiring a controlling stake in Cisco. Valentine hired John Morgridge as the president and chief executive officer (CEO), replacing several people hired by Bosack and Lerner. Cisco went public in 1990, and by mid-year, the company had 254 employees, sales of $69.8 million, and a net income of $13.9 million. However, soon Lerner was having trouble working with Morgridge, and Bosack was unhappy in his new position. In August 1990, Lerner was fired, and Bosack quit. They sold their shares in the company.
In the early 1990s, Cisco continued to grow, and its revenue reached $330 million in 1992. The same year, Fortune named Cisco the second-fastest growing company in the United States. Over the next few years, the company focused on growing internationally, establishing subsidiaries in Hong Kong, Japan, and Australia. It surpassed $1 billion in sales in 1994. It then began to acquire other networking companies such as Crescendo Communications, Stratacom, TransMedia Communications, and Netspeed, Inc. These acquisitions helped the company get involved with other technology, such as digital subscriber line (DSL) equipment. Near the end of the century, Cisco became the fastest company to reach a market capitalization of $100 billion; it had a sales revenue of $12 billion.
Cisco's market capitalization continued to grow into the twenty-first century, and the company was named the third most valuable company worldwide, behind Microsoft and General Electric Company, respectively, in 2000. In the 2010s, the company continued its acquisition pace. To enhance its technology offerings and market reach, Cisco Systems acquired Meraki, a cloud networking leader, in 2012 and a similar company, BroadSoft, in 2017. The company also acquired the application performance monitoring corporation AppDynamics in 2017. It also formed alliances with Microsoft, Hewlett-Packard Company, and Intel Corporation. By the 2020s, it had more than 90,400 employees and revenue of nearly $54 billion. Its market capitalization was over $213 billion. In 2020, Cisco acquired ThousandEyes, a network intelligence company, followed by IMImobile Acquisition in 2021. In 2024, Cisco completed its largest acquisition to date, purchasing the data analytics and security firm Splink for $28 billion. With this acquisition, Cisco introduced Cisco AI Defense, designed to help companies adopt artificial intelligence solutions.
In February 2024, Cisco announced plans to lay off over 4,000 employees, about 5 percent of its global workforce, citing economic challenges and shifting market demands.
Impact
Cisco Systems got its start in computer networking but evolved to include other products and technologies through all of its acquisitions. Some of the technologies it gained included switching, next-generation network (NGN) routing, wireless, service provider video, and security. The company also offers technical support services, builds networks, and helps to automate, integrate, and digitize information technology (IT)-based products and services. By the 2010s, the entity began to focus on cybersecurity, as cyber threats and hackers continued to plague companies worldwide. All of this has helped Cisco become the leading computer networking company in the world into the twenty-first century.
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