**10,000 Fans Incentive Plan
Cisco, a global leader in networking equipment, is planning a business restructuring to focus on areas with high growth potential. According to domestic ** reports, this strategic adjustment may involve laying off thousands of employees. The exact number of layoffs is still being decided, but considering that Cisco's total workforce as of fiscal 2023 is 84,900, even with a minimum estimate of "thousands", it could mean about 1178% of employees will be at risk of being laid off.
This strategic realignment comes against the backdrop of Cisco's competitive pressures in the global network equipment market. Although Cisco once monopolized the global market for network equipment such as routers and switches, it has faced challenges from Huawei and other manufacturers in recent years. Especially in the Ethernet switching market, according to IDC statistics, in the second quarter of 2022, the market shares of Cisco, Huawei, and Arista were: 1%。It is worth noting that ten years ago, Huawei and Arista had a market share of less than 2% in this area, showing that these vendors are catching up with Cisco.
Cisco's history of competition with Huawei is also interesting. Beginning in 2002, the two companies went to court over patent infringement, and Huawei equipment was subsequently banned from sale in the United States. The incident prompted Huawei to push for its own network certification system, further intensifying its competition with Cisco.
Cisco Systems has long been a leader in the networking equipment industry, but in recent years it has faced challenges on multiple fronts that have led to a decline in its market position and influence. Here are some of the key factors that have combined to contribute to Cisco's relative decline.
1. Ignoring customer needs and competitors: In recent years, Cisco has been busy integrating resources, but neglecting to understand the real needs of customers and pay attention to competitors. As a result, Cisco's core business, the router and switch business, has been diluted, and its market share has been gradually eroded by competitors. At the same time, Cisco also ignored the development of emerging fields, such as cloud computing and big data, and failed to launch competitive products and services in a timely manner.
2. Bloated organization and lagging strategic adjustment: With the expansion of the company's scale, Cisco's organizational structure has become bloated and decision-making is inefficient. This makes it difficult for companies to quickly adjust their strategies in the face of market changes, and many development opportunities are missed. In addition, Cisco's failure to adjust its strategy and business model in a timely manner in response to the challenges of the mobile Internet and cloud computing era has weakened its influence in these areas.
3. Fierce competition with competitors such as Huawei: The rapid rise of Chinese manufacturers such as Huawei in the field of network equipment has posed a huge challenge to Cisco. Huawei and other equipment manufacturers continue to catch up with Cisco in terms of technological innovation and market share, which makes Cisco's competitive pressure in the global market continue to increase.
4. Product complexity and quality: Cisco's products are known for their high quality and performance, but they are also criticized for being expensive and complex to configure. This has led some customers to switch to cheaper, easier-to-use alternatives.
On the other hand, Huawei has been in full bloom in many businesses over the years!
Huawei has made significant progress in 2023, especially in smartphone sales, R&D investment, and HarmonyOS upgrades. Specifically:
Smartphone sales growth: Huawei's smartphone sales grew 37% year-over-year, thanks in large part to the contribution of the Mate 60 series. This shows that Huawei still maintains strong competitiveness and innovation capabilities in the smartphone market.
Increased R&D investment: Despite a decline in net profit in 2022, Huawei's R&D investment reached a new high, accounting for 25% of its annual revenue1%。This percentage is much higher than many companies in the same industry, reflecting Huawei's commitment to future technology and product innovation.
HarmonyOS system upgrade: Huawei's HarmonyOS operating system (HarmonyOS) is also constantly advancing the upgrade plan, and as of January 31, 2023, 62 devices have received the official version upgrade of HarmonyOS 3, and there are also devices that have started public beta recruitment and pollen beta testing. This shows Huawei's continuous progress and development in its own operating system.
The reason why Huawei has developed better and better over the years is that it has always adhered to market orientation, focused on technological innovation and global layout, and has a flexible organizational structure and the ability to respond to challenges. The combination of these factors has enabled Huawei to achieve remarkable success in the global network equipment market.