Cisco Systems Inc - Early History

Two Stanford University computer scientists—Leonard Bosack and Sandra Lerner—established Cisco Systems in December of 1984. The new company began marketing the internetworking technology Bosack had developed while at Stanford to universities, research centers, and government agencies. The following year, Stanford asked Cisco for $11 million in licensing fees, arguing that Stanford held rights to Bosack's technology since it had been developed at the University. Stanford accepted a settlement of $150,000 and free products and support services in 1986. That year, Cisco became one of the first networking technology firms to develop a router, a device linking a number of local area networks (LANs), compatible with Transmission Control Protocol/Internet Protocol (TCP/IP).

Sales reached $1.5 million in 1987, and Cisco began marketing its networking products to businesses with offices in a wide range of locations. To fund future growth, Cisco conducted its initial public offering (IPO) in 1990. Sales that year grew to $70 million and more than doubled in 1991 to $183 million. Pacific Bell began purchasing the bulk of its routers from Cisco in 1992. New product developments that year included integrated services digital routers, as well as upgrades to fiber distributed data interface (FDDI) and token ring technologies. International expansion was launched via an original equipment manufacturer (OEM) agreement with British Telecom, and Cisco also started to market its routers to U.S. long-distance providers. After revenues surged to $340 million, Forbes ranked Cisco number two on its list of the fastest growing companies in the United States.

When the development of asynchronous transfer mode (ATM) technologies threatened to render router technology obsolete in 1993, Cisco developed routers that could assist ATM transmissions. International expansion continued with the establishment of Cisco Systems HK Ltd. in Hong Kong and new units in Europe, Japan, and Australia. AT&T Corp. and Strata-Com agreed to work with Cisco to foster compatibility among rival protocols.