Cisco CEO Chambers: Retirement Decision 3 Years in the Making

NEWS ANALYSIS: John Chambers wanted to help steer Cisco through its latest transition and said he is now ready to hand the reins to Chuck Robbins.

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Cisco Systems CEO John Chambers said it was about three years ago that he saw a transition beginning in the industry—the digitization of business—that would put the focus on the network, the sweet spot for his company for more than two decades.

Trends such as IT mobility, big data, social networking, the Internet of things (IoT)—or what Cisco officials refer to the as the Internet of everything (IoE)—and the cloud would significantly change the way business was run and the technology that organizations would need. Chambers said he wanted to lead Cisco through that transition, and then step aside.

He figured at the time it would take between two and four years. In year three, Chambers is deciding to step down.

Cisco's board of directors announced May 4 that Chambers, 65, will relinquish the CEO job on July 26 after 20 years at the helm of the giant networking vendor, handing control over to 17-year company veteran Chuck Robbins. Chambers will be executive chairman of the board and remain board chairman, though he made it clear during a conference call with journalists and analysts that the final decisions on Cisco's direction will lie with Robbins.

The move comes after working with candidates both in-house and externally over the past 10 months, Chambers said. While lauding the other candidates, he said Robbins separated himself from the others in such areas as vision, strategy and execution. It was Chambers' job to coach the candidates and the board's job to make the final call, he said. He declined to name the other candidates.

Robbins will remain senior vice president of worldwide operations until July. He joined the board of directors May 1.

The move surprised some industry observers, who expected Cisco President Rob Lloyd to be the next CEO. However, some analysts said the move to promote from within made sense, particularly given the gains the company appears to be making, not only in networking but in the array of other market segments the company plays in, from data center systems and collaboration technology to services and security.

"Having someone who's been there a long time, and who was primarily focused on sales, will continue Cisco's momentum, and maybe enhance it," Mike Fratto, principal analyst for enterprise network systems at Current Analysis, told eWEEK.

Zeus Kerravala, principal analyst with ZK Research, agreed.

"It's good staying in-house," Kerravala told eWEEK, noting the strong momentum Cisco has going right now, particularly given the network-centric nature of such trends as IoT and the cloud. "If you brought anyone [from the outside] in, it could disrupt things."

Cisco saw its fortunes hit their peak during the late 1990s and early 2000s, as the Internet grew rapidly. However, over the past several years, the company has undergone a painful restructuring that has included thousands of job cuts and the shedding of various businesses, particularly around its consumer efforts. Cisco now is looking to transform itself into an enterprise IT solutions and services vendor, touching on everything from data center systems (such as its Unified Computing System, or UCS) and security to unified communications, video conferencing and security. In all, it has 18 business units, according to Chambers.

The $47 billion company also is navigating its way through a rapidly changing networking space that is seeing the rise of network virtualization in the form of software-defined networking (SDN) and network-functions virtualization (NFV). The technologies are aimed at enabling more programmable networks by taking the network intelligence off the underlying hardware and putting it into software. One result has been a growing data center presence of white boxes—low-cost commodity systems built by original design manufacturers (ODMs) that can run a range of operating systems and software.