How did Cisco get to this point? How did things get this bad?

There are three key factors, three big weaknesses in Cisco's operations: over-ambition, distraction and mismanagement.
Ambition

Cisco has always boasted about how it has left its traditional competitors behind, how it is the industry's visionary, and how it can spot market transitions three to five years before they become obvious to everyone else. And in an effort to maintain its 12% to 17% annual growth targets while its core routing and switching markets matured and slowed, Cisco pursued 30 or so markets adjacent to those core businesses.