Analysts believe Cisco may have to spend big on acquisitions if it wants to remain competitive in a changing tech landscape.
Cisco built its business on networking equipment for the enterprise, the kind of equipment companies need to run data centers and on-premise networks. As Business Insider’s Aaron Holmes argues, however, Cisco is facing an existential crisis: the cloud.
Cloud computing is on the rise now more than ever. While the transition was already well underway, the pandemic and rise of the remote workforce sent the transition into overdrive. As more and more companies rely on cloud computing to handle their basic operations, the need for expensive, enterprise-grade equipment to support on-premise networks and data centers drops precipitously.
As a result, many analysts believe Cisco will need to make additional acquisitions to remain competitive and adapt to the changing industry. Such an acquisition could be of an up-and-coming startup that offers a product or service complimentary to Cisco’s ambitions, or it could be a larger acquisition of an established rival.
Fortunately, as Holmes points out, this is nothing new for Cisco. The company has a long history of making acquisitions and isn’t shy about ponying up when the need arises. Hopefully, company leadership realizes the current cloud transitions represents one of those times.