Cisco Systems said that longtime CEO John Chambers will step down this summer, ending a 20-year period at the helm of the networking giant, and will be replaced by Cisco executive Chuck Robbins.
The end of the Chambers era at Cisco, which analysts and investors have been speculating about for years, comes amid a major transformation in the network gear market, as wireless carriers in particular look to cut costs by moving away from proprietary hardware and into Software-Defined Networks (SDN), which provides carriers more flexibility. The shift to SDN has cut into the profits of companies like Cisco, and Chambers has tried to steer the company toward a more software-oriented future. In its most recent quarter, which the company reported on in February, total sales rose 7 percent.
Chambers will assume the role of executive chairman on July 26, and will also continue to serve as the chairman of Cisco's board. In a statement, Cisco said Chambers "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."
Under Chambers, as Internet access and usage exploded, first on wired networks and then in wireless, Cisco grew from a company with $1.2 billion in annual revenue to its current run rate of $48 billion.
The question of Chambers' successor and how Cisco would handle the transition has swirled around the company for the past few years. Last year at Fortune's Brainstorm Tech conference, Chambers refused to discuss the issue. However, 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 looking for a successor for the past 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."
Robbins joined Cisco in 1997 and most recently served as Cisco's senior vice president of worldwide operations, leading the company's global sales and partner team, which the company said generates $47 billion in business.
Chambers praised Robbins as someone "unique in his ability to translate vision and strategy into world-class execution, bringing together teams and ecosystems to drive results." Chambers also said Robbins "knows every Cisco segment, technology area, and geography, and will move the company forward with the speed required to capitalize on the opportunities in front of us. He is a champion of the Cisco culture and has an incredible ability to inspire, energize, and connect with employees, partners, customers and global leaders."
Over the past few years Cisco has cut more than 10,000 jobs amid declining sales in certain segments and geographies, as the company has sought to cut costs and boost profitability. However, the firm has also moved to add jobs in higher-growth areas, including its data center, software, security and cloud offerings.
Robbins will now be charged with continuing to lead Cisco into the SDN era of networking and the Internet of Things. "This transition we're going through now, this move to digitization, the Internet of everything," Robbins said in a video on the company's website, "I believe it represents and opportunity that is going to dwarf what we saw in the late 90s. So I'm incredibly excited."
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