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Cisco's Chambers Predicts 'Brutal' Tech Consolidation

Mitch Wagner
5/20/2014
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SAN FRANCISCO -- CiscoLive -- Tech companies will see "brutal, brutal consolidation," with most of today's leaders falling, Cisco CEO and Chairman John Chambers said at his keynote here Monday.

"If you look at the top companies in the industry, most of them will not exist in a meaningful way in 10 years," Chambers said. "You're going to see a brutal, brutal consolidation of the IT industry." He singled out Hewlett-Packard Co. (NYSE: HPQ) and IBM Corp. (NYSE: IBM) as two companies that have failed to produce revenue.

Companies that produce standalone products rather than complete architectures will be in trouble, Chambers said. "This is where individual companies will get squeezed between Cisco and white labels."

Cisco Systems Inc. (Nasdaq: CSCO), which has its own problems, has a plan for bouncing back, based on leading in SDN, collaboration, cloud, and Internet of Everything. Cisco plans to be number one in all those markets, Chambers said. (See Cisco Earnings Suffer From Carrier Weakness.)

As part of its collaboration strategy, Cisco on Monday introduced two new devices designed to bring affordable, high-quality videoconferencing to the desktop. The DX80 is a high-performance videoconferencing system that doubles as a computer monitor, while the DX70 has a smaller display with the same videoconferencing hardware. (See Cisco Wants to Tidy Up Desktop Videoconferencing.)

Cisco's Application Centric Infrastructure (ACI) is core to its SDN strategy. "We will be the best implementation of SDN in the world," Chambers said. As part of ACI, Cisco introduced its WAN Automation Engine Sunday and tools for integrating virtual and physical networks on Friday. Also on Sunday, top Cisco executives discussed how SDN can help cut costs, increase agility and revenue for enterprises and service providers. (See Cisco Intros Automated WAN Management, Cisco Integrates Virtual, Physical Networks, and Cisco Drops the S-Bomb.)

And Intercloud, a network of clouds built by Cisco and service provider partners, is key to Cisco’s cloud strategy, driving Cisco from top private cloud vendor to top of hybrid cloud, Chambers said. (See Cisco's Cloud Bet: What's in It for SPs?.)

Jim Grubb, Cisco chief demonstration officer, took the stage to show how the Internet of Everything can be used to improve railroad performance, achieving, it is claimed, 40% more usage out of existing tracks with increased safety. These kinds of improvements will be available for every form of transportation, Chambers said.

Alan Matula, executive vice president and CIO of Royal Dutch Shell, then joined Chambers to describe how that company is working with Cisco to improve shale oil mining, which requires drilling hundreds of wells. Cisco helps Shell collect information about those wells to improve efficiency.

— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to wagner@lightreading.com.


Want to learn more about SDN and the transport network? Check out the agenda for Light Reading's Big Telecom Event (BTE), which will take place on June 17 and 18 at the Sheraton Chicago Hotel and Towers. The event combines the educational power of interactive conference sessions devised and hosted by Heavy Reading's experienced industry analysts with multi-vendor interoperability and proof-of-concept networking and application showcases. For more on the event, the topics, and the stellar service provider speaker lineup, see Telecommunication Luminaries to Discuss the Hottest Industry Trends at Light Reading's Big Telecom Event in June.


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thebulk
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thebulk,
User Rank: Light Sabre
5/22/2014 | 1:34:11 AM
Re: Maybe for some
It could carry them to acquisition or it can allow them to lay a foundation which will allow them to build on it and grow into a company which offers a full solution based around that single product. 
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
5/21/2014 | 9:51:18 PM
Re: Maybe for some
thebulk - Indeed, a single product, if it's successful, can carry a compay to acquisition. 
thebulk
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thebulk,
User Rank: Light Sabre
5/21/2014 | 8:15:16 AM
Re: Maybe for some
To be fair, I do not think they will survivie with a single product, but I think in some cases it might be enough to get then off the ground and they can focus on a total picture down the road. I see a lot of this happening in the IoT space now, many people in the wearable and home automation space are coming out with a single product, if they are able to develop a strong user base they can then move on to a total solution. 
DOShea
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DOShea,
User Rank: Blogger
5/20/2014 | 9:53:06 PM
Deja vu
Weren't the big end-to-end telecom vendors predicting the demise of standalone solutions 10 years ago? 15 years ago? All of the above? Doesn't that kind of thinking overlook the value of partnerships?
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
5/20/2014 | 12:19:26 PM
Re: Maybe for some
thebulk - What are some examples of single-product BtoB tech companies that seem likely to survive and thrive?
mendyk
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mendyk,
User Rank: Light Sabre
5/20/2014 | 9:06:21 AM
Plus ca change etc.
The world will change? Wow -- this 21st century is a trip. Speaking of trips, let's hope Cisco does better than Mussolini in getting the trains to run on time.
thebulk
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50%
thebulk,
User Rank: Light Sabre
5/20/2014 | 8:28:56 AM
Maybe for some
I am sure this will happen with some companies, but there are some where a single product is enough to get them rolling and they can worry about offering up a more complete picture down the road without fear of being squeezed out. My thoughts anyway. 
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