Vendors Respond to 'Net Slump

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Faced with a shifting Internet-equipment market, Cisco Systems Inc. hopes to improve its track record by reorganizing its product-marketing and engineering staffs.

The past year's economic woes have cause plenty of headaches for the Internet equipment maker, which will reorganize itself into 11 new technology engineering groups with a centralized marketing structure. The idea is to eliminate overlaps in product service and to reach a customer base that no longer falls into Cisco's original large categories: enterprises, service providers or consumers.

Company officials said the reorganization was prompted by shifts in its customer landscape. In particular, Cisco is finding that products developed for one specific market segment have applications in another. Tying marketing groups to individual categories made it difficult to find the right combination of gear for specific customers.

"What we had was a somewhat artificial isolation of products," said Charlie Giancarlo, who was appointed to run four of the 11 technology groups. "What this allows us to do is, it allows those market segment groups to be really quite independent of the products we produce to really focus on what our customers require. And it allows our engineering organization to focus on building best-of-breed products."

Cisco's 11 new technology groups are access, aggregation, Internet switching and services, Ethernet access, network-management services, core routing, optical, storage, voice, wireless and the IOS Technologies division that handles network-systems software.

Former new business ventures group senior vice president Mario Mazzola has been named chief development officer and will oversee the 11 engineering technology groups. Giancarlo shifts from senior vice president of the commercial line of business to run the access, Ethernet access, aggregation and wireless groups.

Internet switching and services — the largest of the technology groups — will be headed by former chief strategy officer Michelangelo Volpi. Other individual executives will run the remaining groups.

James Richardson will head up the newly centralized marketing group.

The restructuring brings about a notable departure in senior vice president, service provider line of business Kevin Kennedy. It was Kennedy who ramrodded Cisco's entry into the service-provider equipment business and who was a major cheerleader for Internet networking. He will remain a Cisco technical adviser, but won't be part of the day-to-day operations.

"We would have liked for him to have stayed," Giancarlo said. "But I think that Kevin really relished the Wild West environment that we had over the last four years, and really saw himself as someone who likes to build in that type of environment.

"Now — where we have to make ourselves much more efficient, and where this is not a time where we are hiring tons of people and so forth, but really have to go about the hard work of rationalizing the products and really focusing on what our customers are actually going to be building over the next several years — I think he decided that that was not the kind of environment that he was looking for."

Cisco isn't the only equipment supplier changing its stable in order to run a better race. Fellow equipment provider Terayon Communication Systems Inc. said it's forming an in-house design and consulting group to help operators meld multiple-vendor equipment within their systems.

The idea is to help cable engineering staffs put together complete video, voice and data delivery systems at a time when no vendor — including Terayon — can provide all of the necessary pieces, said senior vice president and chief scientist Rich Prodan.

The free-of-charge consulting would be offered to buyers of Terayon equipment. The company will also offer consulting services to MSOs as they assess new cable technologies.

"By going back and not just having the engineers talk together and spit out a bunch of specs — and solve a problem, but it is the wrong problem — we will work with them to decide what they really need," Prodan said. "It's sort of customer care: to look at what they need and the solutions, and bring it back to them to ensure better time to market."

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