The Cisco Multiprotocol Routers

The founders of Cisco initially tried to sell the internet-working technology that Bosack had developed to existing computer companies, but none were interested. They then decided to start their own business, Cisco Systems, based on this technology (they came up with the name, a shortened form of San Francisco, while driving across the Golden Gate Bridge). Bosack and Lerner were joined by colleagues Greg Setz, Bill Westfield, and Kirk Lougheed, as cofounders. Stanford University later tried to obtain $11 million in licensing fees from the new company, because Bosack had developed the technology while an employee at the university, but eventually the university settled for $150,000 and free routers and support services.

The company was established on a very tight budget. In fact, Bosack and Lerner had to mortgage their house, run up credit card debts, and defer salaries to their friends who worked for them in order to get the venture off the ground, and, even after two years of business, Lerner maintained an outside salaried job to supplement the couple's income.

Cisco's primary product from the beginning was the internet-working Cisco router, a hardware device incorporating software that automatically selects the most effective route for data to flow between networks. Cisco's routers pioneered support for multiple protocols or data transmission standards, and could therefore link together different kinds of networks, those having different architectures and those built on different hardware, such as IBM-compatible personal computers, Apple Macintosh computers, UNIX workstations, and IBM mainframes. Cisco thus became the first company to commercially provide a multi-protocol router when it shipped its first product in 1986, a router for the TCP/IP (Transmission Control Protocol/Internet Protocol) protocol suite. A year later, Cisco was selling $250,000 worth of routers per month. Sales for the fiscal year ending July 1987 were $1.5 million, and the company had only eight employees at the time.

Cisco initially marketed its routers to universities, research centers, the aerospace industry, and government facilities by contacting computer scientists and engineers via ARPANET, the precursor to what was later known as the Internet. These customers tended to use the TCP/IP protocols and UNIX-based computers. In 1988, the company began to target its inter-networking routers at mainstream corporations with geographically dispersed branches that used different networks. To that end, Cisco developed routers serving an even greater array of communications protocols and subsequently distinguished its routers by enabling them to support more protocols than those of any other router manufacturer. By the late 1980s, when the commercial market for inter-networking began to develop, Cisco's reasonably priced, high-performance routers gave it a head start over the emerging competition.

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