This article appeared in my old blog at http://www.bloglines.com/blog/wsodeman?id=206
Peter Burrows of Business Week reports on Cisco’s recent performance. Cisco is the dominant vendor of networking equipment worldwide. I think of Cisco as the Internet’s plumber. Your packets moved through a Cisco switch or router at some point in their journey.
If you use a Linksys router or network appliance at home, you’re using a Cisco product. Cisco purchased Linksys in 2003, and has been integrating operations and marketing ever since. Linksys is positioned as an entry point for SOHO (small office and home office) users who need networking equipment, and who may need higher-powered Cisco equipment when their business expands. At the same time, Cisco engineers have been remaking the Linksys line, using best practices from Cisco’s enteprise networking equipment.
A virtuous cycle occurs when a company moves from one “favorable circumstance” to another over time. Amazon, eBay, Microsoft, Intel, Google and Apple have all benefited from the creation and maintenance of their own v-cycles.
One might argue that Nintendo and Sony are risking their v-cycles, at least in the video game market. Wii and PlayStation 3 each have their own issues.
Cisco has apparently built its own v-cycle around advanced networking technologies, including VoIP (voice over Internet Protocol). VoIP telephones are connected to an RJ-45 jack, not a telephone RJ-11 jack. Remember that RJ-11 also provides electrical power for telephones.
So how does a VoIP telephone get enough power to operate? Users could plug the telephone into an AC outlet, but there’s a neater way. Through a handy protocol called Power over Ethernet (PoE), special switches can connect these phones to the network and deliver 13 watts of power, which is enough to keep a telephone and a small display screen running.
PoE can’t deliver enough power to keep a laptop computer running, which is one reason why laptop computers need their own power source — either AC current or batteries.
PoE features aren’t built into most older network equipment, so any company that wants to deploy VoIP in its offices has to buy PoE switches from Cisco, Foundry or another hardware vendor.
PoE and VoIP adoption are powering Cisco’s virtuous cycle — at least for now.