Cisco has initiated its CEO transition, announcing that John Chambers will step down from his post this summer after a 20-year tenure with the routing vendor and will be replaced by company executive Chuck Robbins.
The transition of the CEO role comes at a time when wireline and wireless providers are looking to implement software-based elements into their networks. Transitioning to software-defined networking (SDN) has cut into the profits of companies like Cisco, and Chambers has moved the company toward a more software-oriented future.
That software transition, which included acquisition of SDN-based companies, is starting to pay off for the hardware vendor. By purchasing tail-f last year, Cisco cemented its position in AT&T's (NYSE: T) Domain 2.0 software initiative. Verizon, one of Cisco's key customers, also recently tapped the vendor as part of its initial vendor team to make its transition to SDN.
Chambers will take on the role as Cisco's executive chairman. The company said that in that position, he will devote his time to supporting Robbins and engaging closely with customers and governments around the world, with a focus on leading Cisco's role in country "digitization."
During his tenure with the company, Chambers helped Cisco grow from a company with $1.2 billion in annual revenue to its current run rate of $48 billion. His tenure hasn't been without its challenges in recent years, with the advent of competition in the router space from Alcatel-Lucent and Juniper.
Although Cisco reported an uptick in its switching portfolio during its second-quarter earnings period, Chambers cautioned that there will be challenges in the service provider market going forward. In 2014, the vendor's reorganization of its routing and switching business affected 25,000 employees.
News of Chambers eventual move out of the CEO role should be of no real surprise. In 2011, speculation began to mount as to when he would step down from his role. This came at a time when Chambers conducted a large-scale reorganization of the company that May by shutting down non-core businesses including its Flip camera unit and laying off nearly 13,000 employees.
Chambers, 65, had said he would step down by the end of the company's fiscal year that ends in July 2016, so his retirement from the CEO post is coming earlier than expected. Cisco had been searching for a successor for over 16 months, according to a company blog post.
"This is the perfect time for Chuck Robbins to become Cisco's next chief executive officer. We've selected a very strong leader at a time when Cisco is in a very strong position," Chambers said in a statement. "Today's pace of change is exponential. Every company, city and country is becoming digital, navigating disruptive markets, and Cisco's role in the digital transformation has never been more important. Our next CEO needs to thrive in a highly dynamic environment, to be capable of accelerating what is working very well for Cisco, and disrupting what needs to change."
An 18-year Cisco veteran, Robbins most recently served as Cisco's senior vice president of worldwide operations, leading the company's global sales and partner team that it said drives $47 billion in business for the company. One of his notable contributions to the company was serving on a team to reinvent Cisco's sales organization.
Chambers said Robbins has the "ability to translate vision and strategy into world-class execution, bringing together teams and ecosystems to drive results."
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