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Cisco FY10 router sales down -$1.366 billion from FY08
Tue, 9/21/10 - 10:46pm    View comments

Cisco George MortonWhile examining Cisco's Form 10-K filing this week with the U.S. Securities and Exchange Commission (Page 17), I noticed that Cisco's product sales for FY10 were down -$679 million from FY08. Digging further into Cisco's filing (Page 20), I found the culprit:

Cisco's FY10 router sales were down a whopping -$1.366 billion from FY08. Interestingly, Cisco's sales of its remaining FY10 product groups (Switches, Advanced Technologies and Other) surpassed FY08.

Cisco explained its FY10 router sales:

"We categorize our routers primarily as high-end, midrange, and low-end routers. Our sales of routers increased in our high-end category in fiscal 2010 while sales of routers declined in both the midrange and low-end categories. Within the high-end router category, the increase was driven by the higher sales of the Cisco CRS-1 Carrier Routing System, higher sales of the Cisco 7600 Series Routers, the Cisco ASR 1000 and 9000 Series Aggregation Services Routers, and the inclusion of the Cisco ASR 5000 products from our acquisition of Starent, partially offset by lower sales of Cisco 12000 Series Routers. Our decline in sales of midrange and low-end routers was primarily due to a decline in sales of our integrated services routers."

Dual CCIE #18532 Security and Router/Switch - George Morton, gave his take on Cisco's router sales:

"The problem is ISP's aren't selling as many circuits, router sales are reflecting that change. With current ISP financial conditions, Cisco has suffered along with them. Second issue is the impulse to refresh existing ISP routers is limited without new revenue streams to support the upgrades. In the past, a refresh from a 4000 or 2500 to a 2600 made sense, fewer parts, no DSU/CSU and a greater variety of interfaces for ATM, Frame, PPP, Token Ring, etc. and better MTBF and MTTR. Thirdly, the need for a robust bridge supporting multiple protocols is limited. Bridges from Token Ring or Apple Talk to IPX and IP networks, you could not get along without Cisco routers. Today everything is Ethernet, so why buy a router when you can get everything in a switch at much higher throughput. For Enterprise networks the router at the WAN edge is the only router in the network, and without a compelling reason to upgrade, it most likely won't be anytime soon."

Router Sales Stages

Router Sales Stages
Source: Dual CCIE #18532 George Morton

However, tellingly at least in my opinion, Cisco's FY10 switch sales grew by just a mere +$30 million over FY08 (Page 20).

Cisco's Integrated Services Router Models

Cisco's Integrated Services Router Models
Cisco's Integrated Services Router Models

What's your take, why do you think Cisco's FY10 router sales are down $1.366 billion from FY08?

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