Xperia, cisco has not been the technology leader in networking for many, many years. However, cisco is able to buy the leader, or second best. Do not discount the value of that.
cisco has good sales and marketing for large customers. Competitors such as Juniper have lousy sales and marketing, and that combined with cisco's current market position makes them an easy choice for a lot of customers. Do not discount the business value of being an easy business choice.
cisco's number one problem in my opinion is that they are expected to have an answer to everything in networking, so they are constantly on the defensive at some level. They have so much market share at this point that the business is theirs to lose, and there are always a lot of hungry start-ups trying hard to take it from them. The main consequence of this is that cisco is truly a value stock now, not a growth stock - it's nearly impossible for cisco to substantially exceed the rate of growth of their market, and the size of their market is increasingly outside cisco's control.
Their UCS line is a bold bet on cisco's part. If it pays off, they have managed to move into a substantially sized new market, which is exactly what they have to do in order to grow. If it does not pay off, they have managed to declare war on some well entrenched companies who used to be big partners of theirs, and those partners will gleefully punish cisco.