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Management's Discussion and Analysis of Financial Condition and Results of Operations

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Management's Discussion and Analysis of Financial Condition and Results of Operations Management’s Discussion and Analysis of Financial Condition and Results of Operations Net Product Sales by Groups of Similar Products In addition to the primary view on a geographic basis, we also prepare financial information related to groups of similar products and customer markets for various purposes. The following table presents net sales for groups of similar products (in millions, except percentages): Variance Variance Variance Variance Years Ended July 31, 2010 July 25, 2009 in Dollars in Percent July 25, 2009 July 26, 2008 in Dollars in Percent Net product sales: Routers $ 6,574 $ 6,311 $ 263 4.2% $ 6,311 $ 7,940 $ (1,629) (20.5)% Percentage of net product sales 20.3% 21.7% 21.7% 24.0% Switches 13,568 12,119 1,449 12.0% 12,119 13,538 (1,419) (10.5)% Percentage of net product sales 41.9% 41.6% 41.6% 40.9% Advanced technologies 9,639 9,093 546 6.0% 9,093 9,446 (353) (3.7)% Percentage of net product sales 29.7% 31.2% 31.2% 28.5% Other 2,639 1,608 1,031 64.1% 1,608 2,175 (567) (26.1)% Percentage of net product sales 8.1% 5.5% 5.5% 6.6% Total $ 32,420 $ 29,131 $ 3,289 11.3% $ 29,131 $ 33,099 $ (3,968) (12.0)% Routers Fiscal 2010 Compared with Fiscal 2009 We categorize our routers primarily as high-end, midrange, and low-end routers. Our sales of routers increased in our high-end category in fiscal 2010 while sales of routers declined in both the midrange and low-end categories. Within the high-end router category, the increase was driven by the higher sales of the Cisco CRS-1 Carrier Routing System, higher sales of the Cisco 7600 Series Routers, the Cisco ASR 1000 and 9000 Series Aggregation Services Routers, and the inclusion of the Cisco ASR 5000 products from our acquisition of Starent, partially offset by lower sales of Cisco 12000 Series Routers. Our decline in sales of midrange and low-end routers was primarily due to a decline in sales of our integrated services routers. Fiscal 2009 Compared with Fiscal 2008 Our sales of routers decreased across each category with the decline in sales of high-end routers of approximately $1.1 billion representing the most significant decrease in dollar and percentage terms. Within the high-end router category, the decline was driven by the lower sales of Cisco 12000 Series Routers, Cisco 7600 Series Routers, and the Cisco CRS-1 Carrier Routing System, partially offset by an increase in sales of Cisco ASR 1000 Series Aggregation Services Routers. Because our high-end routers are sold primarily to service providers, our high-end router sales during fiscal 2009 were adversely impacted by, among other factors, a slowdown in capital expenditures in the global service provider market, and the tendency of service providers to make large and sporadic purchases. Our decline in sales of midrange and low-end routers was primarily due to a decline in sales of our integrated services routers. Switches Fiscal 2010 Compared with Fiscal 2009 The increase in net product sales related to switches in fiscal 2010 compared with fiscal 2009 was due primarily to higher sales of our modular and LAN fixed-configuration switches of approximately $830 million and $630 million, respectively. The increase in sales of modular switches was primarily due to the increased sales of our Cisco Nexus 7000 and Cisco Catalyst 4500 Series Switches, partially offset by decreased sales of our Cisco Catalyst 6000 Series Switches. The increase in LAN fixed-configuration switches was primarily due to increased sales of Cisco Catalyst 2960 Series Switches and Cisco Nexus 5000 and 2000 Series Switches, partially offset by decreased sales of our Cisco Catalyst 3560 Series Switches. Fiscal 2009 Compared with Fiscal 2008 The decrease in net product sales related to switches in fiscal 2009 compared with fiscal 2008 was due to lower sales in modular switches and local-area network (LAN) fixed-configuration switches of approximately $740 million and approximately $680 million, respectively. The decrease in sales of modular switches was primarily due to decreased sales of Cisco Catalyst 6500 and 4500 Series Switches, partially offset by increased sales of Cisco Nexus 7000 Series Switches. The decrease in sales of LAN fixed- configuration switches was primarily a result of lower sales of Cisco Catalyst 3560 and 3750 Series Switches. 20 Cisco Systems, Inc..
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