Chapter 42 Chapter 1 Good wind relies on strength
Like HP, Sun, Yahoo, Google, etc., Cisco is a standard Stanford company.Each department of Stanford has its own networked computing center, and the networks are connected through a device called a router.In the early 1980s, Leonard Bosack and Sandy Lerner, directors of computing centers in two different departments at Stanford, fell in love.The above are facts, and the following are widely circulated rumors.Two people want to write love letters to each other on the computer. Since they manage different networks and the equipment is messy, there are all kinds of manufacturers and protocols, and they are incompatible with each other. It is very inconvenient to send love letters, so the two simply invented a A router that can support various network servers and various network protocols.So the "multi-protocol router" that Cisco relies on for survival was born.
The vast majority of people who heard this rumor believed it, because it was not only mixed with many facts, but also reasonable.Although the Internet has existed for a long time, many universities, companies, and government departments in the United States have used LANs since the 1970s, and routers connecting to the Internet have also existed for a long time.However, due to the network protocols adopted by different network equipment manufacturers, each company has to promote the protocol it adopts, and no company is willing to make routers for other companies.When the Internet is not popular, this problem is not so big, because the network within a unit basically uses the same protocol.In 1984, the Internet had not yet emerged, so various network companies such as IBM did not pay attention to the importance of this multi-protocol router.
Bosack and Lerner later became a couple.The couple are very smart and hardworking, but very lucky.One year before they founded Cisco, that is, in 1983, the US Natural Science Foundation (NSF) had just invested in the construction of a generalized network NSFNet connecting various universities and several supercomputer centers in the United States, which is the prototype of today's Internet.The purpose of building NSFNet at that time was to allow scientific researchers to use those supercomputers through remote login without having to travel to the supercomputer center.One year after Cisco was created, in 1985, NSFNet began to interface with commercial networks.Since the networks of universities and companies adopt different protocols and use different equipment, the demand for multi-protocol routers suddenly arises.At this time, Cisco launched its first product in 1986, which was used in the fledgling Internet without even developing the market.Cisco Cisco is the last five letters of the English name San Francisco in San Francisco. The icon of Cisco is the Golden Gate Bridge in San Francisco. The founder means to build a bridge connecting different networks.The couple probably never imagined that Cisco would become the world's largest equipment manufacturer in the future.Instead, Sequoia Capital, a well-known venture capital firm in Silicon Valley, took a fancy to the future potential of this market and invested in the young couple.Sequoia Venture Capital likes to invest in young poor people, because the poorer they are, the more successful they are and the fighting spirit they have.Sequoia was right. By 1990, Cisco was successfully listed.
Compared with the companies we introduced earlier from AT&T to Microsoft, Cisco's development is the smoothest.The key to Cisco's early success was that its two founders created one of the world's most needed companies at just the right time.If Cisco had been founded two years earlier, it might have burnt out its investment and closed down before the market rose, and vice versa, if it had been two years late, other companies might have taken the lead.When Cisco was still a small company, each major computer company had its own big market. Their first thought was to defeat their opponents in the network market rather than to develop routers that accommodate the network products of various companies. Therefore, no company competed with Cisco. The market for multi-protocol routers.By the time the Internet emerged, Cisco had already taken the lead in the router market.
Cisco's luck just complements the misfortune of traditional telecommunications companies represented by Lucent. The rise of the Internet has caused a sharp increase in the amount of data transmission in the world, while the amount of voice calls has declined.The figure below is a comparison of the world's data communication volume and voice communication volume from 1996 to 2002, and the unit is Gb/s.
In China, calls to fixed-line local calls have even declined since 2005.According to statistics released by China's Ministry of Information Industry, from January to November 2005, the duration of local calls on fixed telephones increased by 0.1% compared with the same period in 2004.The Ministry of Information Industry also indicated that in the increase in the volume of fixed local telephone calls, the volume of PHS calls increased by 22.0% over the same period last year, and its proportion rose to 25.0% from 20.5% in the same period last year.This actually means that the volume of traditional fixed-line local calls is actually negative growth.In 2006, compared with 2005, the call volume of local calls dropped further.Of course, this is due to the rapid popularization of mobile phones on the one hand, and on the other hand, data transmission has robbed the voice transmission market.
After the first chapter of Top of the Wave "Afterglow of the Empire" was published, some Lucent friends argued with me that their company was still developing, not only afterglow.Let me tell you, you are developing, and judging from the volume of voice communication, it is not too slow to more than double in less than ten years, but the proportion of voice communication in the world's communication volume has dropped from a dominant position to a vassal status .The amount of money that the world can spend on communication equipment is almost constant (increasing by a few percent per year), and more and more money is spent on data communication equipment such as Cisco equipment instead of traditional program-controlled switches. (What's more, Cisco is also grabbing the switch market).Although Lucent can also make products similar to those used by Cisco for the Internet, they have no technical advantages and are seriously short of funds.Cisco has $16 billion in cash after deducting debt, while other telecom equipment manufacturers such as Alcatel/Lucent, Nortel, etc. have zero cash or negative cash after deducting debt.Therefore, since Cisco was born, it has been in an industry where it is difficult not to make money, while Lucent has entered an era where gods can't do anything.
Cisco was lucky to stand on the top of the wave of the Internet revolution. Driven by the tide of the Internet revolution, Cisco can still maintain a strong growth momentum after listing.Of course, Cisco's top spot as a network equipment supplier depends largely on its very special culture.
In China, calls to fixed-line local calls have even declined since 2005.According to statistics released by China's Ministry of Information Industry, from January to November 2005, the duration of local calls on fixed telephones increased by 0.1% compared with the same period in 2004.The Ministry of Information Industry also indicated that in the increase in the volume of fixed local telephone calls, the volume of PHS calls increased by 22.0% over the same period last year, and its proportion rose to 25.0% from 20.5% in the same period last year.This actually means that the volume of traditional fixed-line local calls is actually negative growth.In 2006, compared with 2005, the call volume of local calls dropped further.Of course, this is due to the rapid popularization of mobile phones on the one hand, and on the other hand, data transmission has robbed the voice transmission market.
After the first chapter of Top of the Wave "Afterglow of the Empire" was published, some Lucent friends argued with me that their company was still developing, not only afterglow.Let me tell you, you are developing, and judging from the volume of voice communication, it is not too slow to more than double in less than ten years, but the proportion of voice communication in the world's communication volume has dropped from a dominant position to a vassal status .The amount of money that the world can spend on communication equipment is almost constant (increasing by a few percent per year), and more and more money is spent on data communication equipment such as Cisco equipment instead of traditional program-controlled switches. (What's more, Cisco is also grabbing the switch market).Although Lucent can also make products similar to those used by Cisco for the Internet, they have no technical advantages and are seriously short of funds.Cisco has $16 billion in cash after deducting debt, while other telecom equipment manufacturers such as Alcatel/Lucent, Nortel, etc. have zero cash or negative cash after deducting debt.Therefore, since Cisco was born, it has been in an industry where it is difficult not to make money, while Lucent has entered an era where gods can't do anything.
Cisco was lucky to stand on the top of the wave of the Internet revolution. Driven by the tide of the Internet revolution, Cisco can still maintain a strong growth momentum after listing.Of course, Cisco's top spot as a network equipment supplier depends largely on its very special culture.