We manufacture and sell networking and communications products and provide services
associated with that equipment and its use. Our products are installed at corporations,
public institutions, and telecommunication companies, and commercial businesses,
and are also found in personal residences. We provide a broad line of products
for transporting data, voice, and video within buildings, across campuses, and
around the world. We conduct our business globally and are managed geographically
in four segments: the Americas; Europe, the Middle East, and Africa (EMEA); Asia
Pacific; and Japan.
We sell scalable, standards-based networking products that cover a wide range
of customers’ networking needs. Our products and services help customers build
their own network infrastructures while providing tools to allow them to communicate
with key stakeholders, including customers, prospects, business partners, suppliers
and employees.
Our products are used individually or in combinations to connect computing
devices to networks or computer networks with each other—whether they are within
a building, across a campus, or around the world. Our breadth of product and
service offerings enables us to offer a wide range of products and services
to meet customer requirements. We also provide products and services that allow
customers to transition their various networks to a single multiservice data,
voice and video network.
We refer to some of our products and technologies as Advanced Technologies,
and we believe some of these Advanced Technologies may grow over time to become
material contributors to our overall business. We have currently identified
six Advanced Technologies for particular focus: IP telephony, security, optical
networking, storage area networking, wireless technology, and home networking,
although over time, additional Advanced Technologies may be identified for focus
and investment. In addition, investments may be curtailed or eliminated in some
presently identified Advanced Technologies depending on market developments
and resource allocation decisions.
Customers and Markets
Our customers’ networking needs are influenced by numerous factors, including
the size of an organization, number and types of computer systems, geographic
location, and the applications requiring communications. Our customer base is
not concentrated in any particular industry. In each of the past three fiscal
years, no single customer has accounted for 10 percent or more of our net sales.
Our customers are primarily in the following markets:
Large Enterprise Businesses
Large enterprise businesses are generally defined as organizations with 500
or more employees, located in multiple locations or branch offices, with complex
networking needs within a multi-vendor environment for computer systems and
IT support infrastructure. Our large enterprise customers span all major industries,
including: government, education, retail, finance, health care, manufacturing
and transportation. We have developed industry-focused solutions to address
specific customer requirements. These solutions include a full range of our
core products and advanced technology solutions such as: enterprise routing,
switching, security, IP telephony, mobility and storage. In addition, we offer
a broad range of value-added services including service and support packages,
financing and managed service offerings through our service provider partners.
Service Providers
Service providers offer data, voice, and/or video communication services to
businesses, governments, utilities and consumers. They include regional, national
and international telecommunications carriers, as well as Internet, cable and
wireless service providers. Many service providers resell our products to their
own residential, enterprise or commercial customers. Additionally, service providers
use a variety of our switching, routing and network management products in their
own core networks. Compared to other end-user customers, service provider customers
are more likely to require network design services, and their business is characterized
by long design cycles.
Commercial
Commercial customers, primarily small and medium-sized businesses, have fewer
than 500 employees and a need for networks of their own, as well as connection
to the Internet and to business partners. However, these customers generally
have limited resources and expertise in networking technology. Therefore, we
attempt to provide products that are affordable and easy to install and use.
The commercial market remains an area of potential growth for network adoption
and deployment of intelligent network solutions. The emerging technologies,
which include network security, mobility and converged voice and data solutions,
are of specific interest to small and medium-sized businesses.
Consumer
We participate in the consumer and small office/home office (SOHO) market through
our recent acquisition of the business of The Linksys Group, Inc (“Linksys”).
Linksys offers several solutions including routers, network cards, USB adapters
and other products that enable customers to deploy networking in their homes
or small office environments.
Competition
We compete in the networking and communications equipment markets, providing
products and services for transporting data, voice and video traffic across
intranets, extranets, and the Internet. These markets are characterized by rapid
change, converging technologies, and a migration to networking solutions that
offer superior advantages. These market factors represent both an opportunity
and a competitive threat to us. We compete with numerous vendors in each product
category. The overall number of our competitors providing niche product solutions
may increase. Also, the composition of competitors may change as we increase
our activity in our advanced technology markets.
Our competitors include 3Com, Alcatel, Avaya, Avici, Check Point Software,
Ciena, Dell, Ericsson, Enterasys, Extreme Networks, Foundry Networks, Fujitsu,
Huawei, Juniper, Lucent, NetScreen, Nokia, Nortel Networks, Redback Networks,
Riverstone, Siemens AG and Sycamore Networks, among others. Some of these companies
compete across many of our product lines, while others are primarily focused
in a specific product area. Barriers to entry are relatively low, and new ventures
to create products that do or could compete with our products are regularly
formed. In addition, several of our competitors may have greater resources,
including technical and engineering resources, than we do. As we expand into
new markets, we will face competition not only from our existing competitors
but from other competitors as well, including existing companies with strong
technological, marketing and sales positions in those markets. We also sometimes
face competition from resellers and distributors of our products.
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