Cisco Lays Off 500 Workers

Cisco laid off 500 workers this week, Cisco confirmed to Business Insider.

The people hardest hit are those involved in Cisco's alliance with EMC and other data center businesses, Jim Duffy at Network World reports.

There's unconfirmed rumors that the layoffs include three of Cisco's top EMC business alliance execs, Cisco blogger Brad Reese reports.

That would make sense.

Cisco has had a strained relationship with EMC ever since its subsidiary, VMware, bought a startup called Nicira for $1.26 billion last year. Nicira makes "software defined networking" products, an upstart technology that promises to disrupt Cisco's bread-and-butter business, switches and routers. SDN is a new way to control networks, and it allows companies to buy less expensive networking gear and less of it. Cisco is known for its premium, higher-priced gear.

Cisco is working on its own way to combat SDN, a stealthy "spin-in" startup called Insieme Networks. No one really knows exactly what Insieme will produce but it was founded by some of Cisco's most brilliant hardware engineers. Speculation is that it's working on a storage product that would allow Cisco to distance itself from partner EMC.

EMC and VMware are important partners for Cisco's hottest data center product, a computer server called Unified Computer Systems. It's about a $2 billion business for Cisco.

Cisco has already taken steps to replace its reliance on VMware's bread-and-butter technology. It created its own version of OpenStack, and this would allow Cisco to stop using VMware's tech internally on its own servers, sources say.

Cisco also invested in VMware competitor, Parallels.

Cisco has been doing ongoing targeted layoffs since its slid into a tailspin in 2011. Cisco calls these layoffs "the Accelerated Cisco Transformation Program (ACT)." It's lead by senior vice president Angel Mendez. Last July, the company laid off 2% of its workforce.

Here's the statement Cisco sent to us:

“We routinely review our business to determine where we need to align investments based on growth opportunities. Earlier this week, Cisco performed a limited restructuring that will impact approximately 500 employees which is less than 1 percent of our population globally. These actions are subject to local legal requirements, including consultation, where required.”