Cisco has decided to change its collaboration strategy, following the segment’s 12 percent drop in revenue for its fourth financial quarter of 2023.
In a bid to reverse this decline, Cisco has said it will sell collaboration solutions as part of a suite, which it will also do with its security portfolio as revenue in this area fell flat.
Total revenue was up 16 percent, however, with all other segments achieving growth, including product revenue and secure agile networks, which were the top performers attaining 20 percent and 33 percent respectively.
Chuck Robbins, Chairman and Chief Executive Officer of Cisco, spoke about the repackaging of its collaboration products: “In certain areas of our portfolio like collaboration and security, we’ve moved to a suite strategy.
“We’re now packaging up the security portfolio in different suites, which allows for us to optimize the security specialist, or actually align them more effectively… that’s the work that’s been going on.
“As we continue to execute on this platform strategy, it certainly simplifies the selling cycle for some of these technologies.
Robbins continued: “We’re trying to get the portfolio put together in a way that makes it easier and requires fewer subspecialists in the field as we move forward.”
The collaboration segment suffered mainly due to waning demand for devices and meetings.
Fortunately, this was partially counteracted by growth in cloud calling and cloud contact centre.
The order growth for both collaboration and security was “positive”, which has largely come from suites that include tools from these segments.
Robbins views this as proof that doubling down on selling these technologies via suites is the best way forward.
He has already given a clear indication of what the collaboration suites will look like, with calling taking the “lead part of the suite”, along with a strong focus on its cloud contact centre due to its triple-digit growth in orders last quarter.
Future Guidance
With this new strategy factored in and weighed against its larger portfolio, Scott Herren, Chief Financial Officer of Cisco, provided the company’s guidance for the next quarter, Q1 2024, as well as for the whole year.
For Q1, revenue is anticipated to be in the range of $14.5 billion to $14.7 billion, which is below the $15.2 billion accumulated this quarter. Bearing in mind Cisco achieved a 16% increase, this is still above its Q3 revenue of $14.6 billion which was, in turn, a 14 percent year-over-year increase.
Revenue projections for the fiscal year of 2024 are in the range of 57 billion to 58.2 billion, which pitches itself on the far side of the 57 billion that it took in revenue earnings this year.
Revenue for the past quarter and year have not only been a question of product improvement, positioning, and packaging.
A Challenging Year
As with most other major technology companies, it has faced turbulent financial headwinds, a post-pandemic world of ever-changing market demands, and internal reshuffles resulting in major layoffs.
The first in the series of layoffs was announced in November, in which four thousand workers were let go, partly to rescue its security and networking segment.
Then, in January, the layoffs continued with 700 more staff being made redundant.
Last month, Cisco was also alleged to have made further layoffs with business units, including Webex and Cisco Collaboration. Again, these layoffs seem to be targeting the weaker aspects of its revenue sales sheet.
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August 17, 2023 at 07:34PM
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Cisco Switches Collaboration Strategy Following Revenue Decline - UC Today
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