Dan McLean
Not many CEOs actively go looking to engage those who are apt to be skeptical and critical of both them and the companies they represent.
Cisco CEO John Chambers does it routinely. At least a couple of times a year Chambers invites a group of IT research analysts to hear the latest from the Santa Clara, Calif.-based networking equipment powerhouse – right from the top source. In addition, there’s usually 30 minutes dedicated to questions from the analysts.
These routine discussions with Chambers aren’t intended to give a “nuts and bolts” engineer’s preview of Cisco’s latest and greatest technological feats, but rather are meant to provide a much more strategic high-level view of where the company is at – from a business standpoint – and where it’s headed. Chambers doesn’t necessarily tell all, but neither does he duck any question. Sometimes everybody gets to ask a question but most times they don’t.
Not surprisingly, the topic of wireless LANs was one of the first discussed during the latest analyst session on Oct. 7. Chambers said Cisco hopes to “increase its footprint in this space,” but did not provide details. He highlighted the importance of wireless networks in future enterprises and computing in general, suggesting wireless communications volume will exceed that of wireline within the next five years. However, one will not replace the other. Instead, wireless and wireline will be a seamlessly interoperable infrastructure, where users will not know when and how communication streams are transported.
“I don’t view it as one winning and one losing…but I think it will be transparent…more where you are physically and what type of bandwidth requirement you have,” Chambers told the teleconferenced analyst group. “Only the CIO will know how the seamlessness occurs and users will not know.”
Cisco’s sights are still set upon the all-important telecommunications carrier community, where Chambers said Cisco seeks “mindshare in the carrier accounts, especially in relationships on the technical side.” Cisco’s message will be to drive understanding of ways to generate new revenue streams through the creations of new carrier communication services – enabled, of course, through the use of Cisco gear.
“It’s really about working closely with them…approaching it from a system architecture approach, rather than from a boxes approach,” Chambers said.
The strategy for Cisco’s Linksys acquisition is emerging. Chambers explained that his company focuses on three key markets: routing/switching, service providers, and emerging technical markets. Linksys, a company that makes small office/home office network equipment, is seen as fitting into the third group. Linksys has the potential to help Cisco move into wireless home network and become Cisco’s entry into the consumer market place, Chamber said, explaining that Linksys will establish leading success first in North America, then move beyond.
“It has a lot of potential. I like very much what the leaders are doing,” he said, explaining that Cisco will continue to allow Linksys to retain its independence from the Cisco parent. Chambers said the Linksys purchase is one that has the greatest potential since Cisco bought Crescendo Communications. That would be an incredible feat, if true. For those who may not remember, switching technology maker Crescendo was Cisco’s first acquisition, made in 1993. Today, many of those Crescendo employees are now key Cisco strategists and business unit leaders.
A point was made during the Q&A discussion that, in moving into the home, Cisco might be setting up a battle with Microsoft Corp. in seeking to “own the home.” However, Chambers made it clear that Cisco’s intention is coexistence, rather than conflict, with Microsoft in creating the enabling infrastructure for a new breed of home-user applications.
“My intention is to partner with Microsoft and other key players in the industry. It would be a mistake not to and I believe that is the intention of both companies,” Chambers said.
He added that both companies ought to work closely in developing partnerships where customers benefit.
“I see it as an opportunity to make the pie bigger,” he said, explaining that, for example, the ease of use and IT security can’t be solved by one company alone, and Cisco, Microsoft, and other key vendors must work together on tackling technology challenges.
A point finally came when this reporter was able to get a word in edgewise. I asked Chambers to identify his greatest disappointment with voice, video and data network convergence so far?
He was frank: “My real disappointment is that video hasn’t taken off as fast as we anticipated,” Chamber said, explaining that users haven’t embraced video and the applications currently available. I quickly followed up to ask Chambers whether this represents the fundamental problem, not just with video, but with voice as well: that the technology is there, but applications don’t yet take advantage of it? Was he concerned that an industry of startups hasn’t yet exploited the potential of voice/video/data function through all sorts of as-yet-unheard-of applications and processes? Is Cisco taking too much upon itself – by being both the creator of next-generation network infrastructure and the pioneer of applications that would take advantage of the technology?
Chambers admitted that Cisco can’t do it alone and reasoned that startups and many other companies must step up – and they will, he said confidently. The logical follow-up questions to the follow-up questions is when will these applications appear, who will build them, and what will they be?
Alas, these must be saved for the next round of talks.
