Cisco – the world's largest networking hardware company – is eliminating about 1,300 jobs as it continues to cut costs.

The cuts, announced Monday, amount to about 2 percent of its global workforce. "These actions, subject to local legal requirements, including consultation where required, are part of a continuous process of simplifying the company, as well as assessing the economic environment in certain parts of the world," Karen Tillman, vice president of corporate communication, told Wired.

The company is facing increasing competition from networking upstarts across the globe, including American outfits such as Arista and the Chinese manufacturer Huawei Technologies. Web giants such as Google, Amazon, Microsoft, and Facebook have already started buying some switches directly from the manufacturers in Taiwan, according to various industry sources.

Mark Fabbi, an analyst with research outfit Gartner, says that although Cisco has long had a knack for locking customers in longterm contracts, the market is starting to open up to new players in a big way. "There are a lot of big customers that have said: 'Cisco has been good but if we can't do it on our terms, we're going to have to go in a different direction,'" Fabbi tells Wired.

On Monday, as Cisco was discussing its cuts, VMware announced that it had agreed to acquire Nicira, a company whose software-based networking platform lets business build networks using commodity hardware bought from anywhere – not just the big name players such as Cisco, HP and Juniper. In more ways than one, the day symbolized the way the world is moving.

"When [VMWare] says: 'We can make the network go away,' now you've got a very different picture," Fabbi says.

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