This came across my desk and it does deserve merit. It seems that healthcare clients are becoming much more informed as the migration to 802.11n becomes a reality. Just last couple of weeks I was doing design work in a hospital that had over 63 Cisco AP(s), installed for 31,000 square feet. In my opinion this was way overkill could have used probably 1/3 less, if not even half. This also created some contention issues that had to be overcome. If you used Ruckus, www.ruckuswireless.com “bark, bark” you might have only had to use around 20. Their beamforming “does work”, and with a heck of lot less hassle factor. This means you do not need extensive site surveys and on-going site tweaking. Bottom line, folks are looking seriously at the CAPEX, OPEX, and TCO, and not blindly going down the path and buying Cisco, because they are Cisco. 802.11n is the game changer.

Cisco Zapped By Destructive Power Of Innovation
While John Chambers’s company has branched far beyond its networking roots, that core business has stumbled—and competitors are pouncing.
By Bob Evans, InformationWeek
Feb. 15, 2011
A funny thing’s happened to Cisco on its way to creating the consumer-driven “human network”: its core enterprise business has begun to buckle under the weight of massive costs, relentless competition from rivals large and small, and prices that have dropped faster than volume sales can rise.
Broad and sweeping ambition can be a wonderful thing in the business world but it usually leads to trouble or even disaster unless that ambition is matched with equal measures of superb market focus, operational execution, and cost management.
Over the last 12 months, Cisco hasn’t scored so well in those vital areas even as it has attempted to transcend its traditional networking business and become a leading or event dominant player in everything from high-end video conferencing to consumer electronics to consumer branding to servers storage that could lead to end-to-end Cisco stacks.
Again, I find nothing wrong with that aggressive approach—but, if you’re going to play that way at that scale, the margin of error is perilously slight.
Cisco’s discovered that in each of its last three quarters as investors have hammered John Chambers’ company for failing to match the strong double-digit revenue growth expectations he predicted and for also failing to manage costs as effectively as Cisco has traditionally done.
As the San Jose Mercury News reported last week: “But despite better than expected revenue and earnings numbers, lingering questions about the company’s gross margins—and what they portend for Cisco’s future profitability—helped drive the stock down nearly 9 percent in after-hours trading. . . .
Chambers in November stunned Wall Street by predicting 3 percent to 5 percent growth for the first quarter and 9 percent to 12 percent for fiscal year 2011; both were significantly less than the 13 percent analysts had expected for both periods, sparking fears the company could be losing market share to competitors.
It was his second cautionary forecast in as many quarters and sent Cisco shares plunging by 16 percent, though the stock had regained some ground in recent weeks. (End of excerpt.)
Meanwhile, networking sales among Cisco rivals such as Hewlett-Packard and Juniper Networks have been booming—so what’s the core problem confronting Cisco?
Investment analyst Jon D. Markman, writing on moneymorning.com, has completed a thorough examination of the patient and says that Cisco is suffering from a very serious case of “the destructive force of innovation”: The really big problem for Cisco—as is true of so many large, sclerotic companies that count on the government for a lot of their business—is that the prices that the firm can charge for its core business are dropping faster than sales, writes Markman in a piece called Cisco Systems Inc.: The Story That Wall Street Missed.
Think about that for a moment.
Revenue for switches—a huge part of Cisco’s business—fell.
That was bad enough. But margins thinned—which is even worse. (End of excerpt.)
How can this be? At a time when companies are frantically expanding their use of online communications and networks for everything from collaborative design to meetings to research to blueprints and video and so much more, the demand for high-capacity and ultra-reliable networking gear has never been stronger.
Why has Cisco not been able to exploit this market demand more aggressively—and, beyond that, why have its growth projections receded to the point where Chambers is reluctant to say if his company can return to its recent 12%+ growth rates?
Ironically, it appears that Cisco, which for the past 15 years has sold products, services, and know-how that helped its customers in every industry accelerate their pace of business and be able to move at the speeds their marketplaces demand, failed to take its own medicine.
Here’s how Markman describes the profit-pounding dynamic Cisco is undergoing:
Yet the elephant in the room is the fact that competitive pressures are forcing Cisco to move customers to new products more quickly than it intended, according to research analysts for Signal Hill Capital LLC. Channel checks suggest that sales of the company’s largest switching platform, the Catalyst 6500, slowed at the end of 2010 as the product rapidly become uncompetitive from a price and functionality perspective.
Responding to this trouble like a SWAT team, Cisco did finally migrate customers to its hot new product lines, the Nexus switch family and the ASR routers family. Both of these are more competitive—but at much lower margin. Ouch! (End of excerpt.)
So because it was not—and perhaps still is not—keeping pace with the requirements and demands of its customers, Cisco’s high-margin legacy products are being cannibalized by its new gear, which offers the performance levels customers need but can’t yet deliver the profit margins investors demand. And this deep-seated problem of Cisco’s, says Markman, is not going away anytime soon.
“This is not a problem that can be fixed in three months,” he writes, because as Web traffic booms and enterprises buy and deploy more-powerful networks to keep up, those recession-hardened customers aren’t willing to pay the premiums Cisco used to be able to command—and competitors like HP and Juniper are more than willing to ensure that pricing pressure only intensifies.
So although Cisco’s been able to migrate its big customers to its new high-end products, the whipsaw effect has been that “because [Cisco] has so many employees and so much overhead this increased business is not dropping to the bottom line,” writes Markman.
And as a result, “We are watching the destructive force of innovation at work.”
It is ironic indeed that Cisco, which over the past couple of decades has helped thousands of customers unleash that very same “destructive force of innovation” on their competitors, is now feeling some of the blunt-force trauma of innovation’s unyielding edge.