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Optical/IP

Cisco's Billion Dollar Plays

SANTA CLARA, Calif. -- John Chambers, president and CEO of Cisco Systems Inc. (Nasdaq: CSCO) broke out the revenue potential and timing of six key technology markets that Cisco believes will drive future growth, during his morning keynote at the company’s worldwide analyst conference here in rainy Santa Clara.

The technology areas that Cisco expects to attain $1 billion markets, in order of current size, are:

  • Security
  • Networked homes
  • IP telephony
  • Optical networking
  • Wireless LANs
  • Storage
Chambers said Cisco’s goal in each of these new technology markets is to get to $1 billion in revenue within five to seven years from when it entered the market, and that Cisco is headed for that goal with each of these technologies.

“At the present time all of them are headed in the right direction, but if we hit half of them that’s a pretty good job."

The Cisco CEO stressed that Cisco as a company aims to practice what he preaches about IT productivity. Cisco’s internal focus was on increasing productivity in terms of both revenue per employee and customer satisfaction.

Chambers said customer satisfaction is one of Cisco’s key metrics, which it uses to rank each employee in the company. He cited a survey from Heavy Reading, Light Reading’s market research division, that indicates that Cisco ranked No. 1 among equipment vendors in the eyes of most carrier employees, emphasizing the need for Cisco to execute on service providers’ positive perception of his company (see Cisco Winning Market Perception War).

[Ed. note: The Heavy Reading 2003 Telecom Equipment Market Perception Study examines the market perceptions of over 700 service provider employees around the world.]

In a Q&A session, Chambers also addressed a print advertising campaign that Juniper Networks Inc. (Nasdaq: JNPR), Cisco’s largest competitor in the router market, is running in the Wall Street Journal. (The campaign, which uses cartoons to disparage Cisco, also may be viewed on Juniper's Website.)

“These cartoon ads have grown increasingly disparaging,” one audience member said. “This is some serious trash talking."

“In terms of how we deal with competition [Cisco] likes to play with class and… talk about what we’re doing, and about the positives within the company,” responded the CEO. “As a coach you don’t let your players make a lot of negative comments about the opposition because they get fired up enough as it is.

"[The Juniper campaign] surprised me because Juniper usually plays with a lot of class, and we are seeing some different behavior from them. Will we follow similar approaches? Absolutely not!”

In response to another question, Chambers said that Cisco’s strategy in selling IP telephony revolves around selling it as an entire network.

“I think the decision [about IP telephony] is already done. The question is whether they will do it with a single network. It has to do with where are you in making pinpoint decisions or network decisions, or network-to-network decisions."

Refining a long-running sales theme, Chambers stressed that, as always, the heart of Cisco’s message is that it can increase productivity with new network technologies.

Increased productivity has a “one-to-one correlation” with capital spending in the IT sector, he said, and continued growth in productivity will drive more capital spending, which in turn will create new jobs.

“We expect our customers to see their business improve, then they’ll spend on capex. Then they’ll watch that for a while, then we’ll see jobs.

“The reason I’m optimistic about not just the next year, but the next decade is productivity and the leverage you get from it. At 5 percent GDP growth, which I think is possible, you can double productivity every 14 years.”

— R. Scott Raynovich, US Editor, Light Reading

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optical_man 12/4/2012 | 11:11:04 PM
re: Cisco's Billion Dollar Plays BobbyMax,
Christmas must be LOADS of fun and joy around your house.
captain_photon 12/4/2012 | 11:11:04 PM
re: Cisco's Billion Dollar Plays Why would they want to buy Corvis? Nobody's buying their crap.
captain_photon 12/4/2012 | 11:11:04 PM
re: Cisco's Billion Dollar Plays Too many of you speculate about Cisco's optical products. The 15540 & 15530 are great products and sell well in the remote DR/SAN space. The 454 is selling too and they have also added DWDM to the platform. I've seen the 454 MSTP DWDM platform and it's capabilities blow away anything that Nortel, Lucent or Ciens/ONI have in the Metro/Regional space. When's the last time any of you have seen or worked with a 15454 platform? It is still the best MSPP and now MSTP platform available. If you don't know, you'd better ask somebody....

signmeup 12/4/2012 | 11:11:03 PM
re: Cisco's Billion Dollar Plays captain_photon

Perhaps you should change your name to captain_koolaid...

Having extensively tested and at times be a remote systest person for the 15454 MSTP/MSPP/ect. I can most assuredly state that it is NOT the best platform out there. Sure if you compare it against a 10 year old platform from LU or NT, but then again that ain't hard to beat.

It IS a very good box with a particular size of customer in mind. It was never designed to operate in a large scale environment. If you are a small to medium provider/MSO/enterprise then it is a very flexible product.
waverunner 12/4/2012 | 11:11:03 PM
re: Cisco's Billion Dollar Plays captain,

Give me a break, somebody help me here, 454 better than the 5200, that ugly hunk of metal is good for warming up lunches. Cisco just doesn't get it, understand this market first, your Procter and Gambles and Citibanks are not going to get you to a billion in revenue in this space. You have to sell to the Service Providers, that's right "Service" being the takeaway word. This means, who gives a hoot about your bandwidth utilization claims when you can buy a 5200 rack order one product code and it can service ESCON, FICON, 10/100, OC-n, FC...Hey Cisco do you understand problems like stranded bandwidth, provisionig times, truck rolls, I don't think so!

fw23 12/4/2012 | 11:11:03 PM
re: Cisco's Billion Dollar Plays change_is_good,

Is your job at juniper in Scott's trash-talk
department? You seem like the kind of guy
who would be spending all his time bashing
and creating those little cartoons and
bribing search engines while \rome\ is burning.

I've got news for you pal. Its over. You can
only fool people with juniper's sort of trickery
for so long before the truth comes out.

And scott is running out of phony distractions.
Whats next? A big acqusition in the egg timer
business with a big show to cover up the fact
that investors are not seeing profits?

We all remember that big fraud of a cable deal.

Pack it in son. The game is over. Your starting
pitchers have been traded and the organization
is full of minor leaguers. You can bash
me to cover up the obvious, but its just not
going to work where you need it.

HEAVY READING told Juniper what it needs to
do. But Scott isn't listening. He would
rather whine about cisco than do whats necessary
to save the company.

And if you need any more of a hint, the
superbowl is only a couple months away now.

captain_photon 12/4/2012 | 11:11:02 PM
re: Cisco's Billion Dollar Plays Waverunner - The 454 is CAN aggregate. And it is SP certified. In addition, a full 32 channel protected system takes up half the space of a 5200.
cyber_techy 12/4/2012 | 11:11:01 PM
re: Cisco's Billion Dollar Plays Author: captain_photon Number: 20
Subject: Re: $1b in optical Date: 12/11/2003 10:27:28 AM


Why would they want to buy Corvis? Nobody's buying their crap.
================================================
That's the trick. I've heard stories about carriers not willing to buy from a startup with a boatload of reasons regarding the performance of the equipment.Within one month Cisco bought the startup and suddenly all the carriers objections wither away (with the same equipment that they refused to look at before).

Face it, there is some sort of cult following at carriers especially with the decision making people. It does not matter if the people who actually run the network loathe Cisco and believe me, there are plenty.
lightingrod 12/4/2012 | 11:11:00 PM
re: Cisco's Billion Dollar Plays You just showed you know nothing. You just compared a SONET box (454) to Nortel DWDM platform.

Ask Cisco what link budget they support with 32 wavelengths in a box. OOPS that's right they can not go as far and have many restrictions when configuring a box this way.

OOps they have thermal problems too and can't operate in certain envrionmetns in a 32 wave lenght setup.

Cisco gets bashed because on paper they look good but in practice all the upgrades and restrcited configurations make deployment more of a headache. Customer like boxes that work they same on paper as they do in real life.
captain_photon 12/4/2012 | 11:11:00 PM
re: Cisco's Billion Dollar Plays Actually, you know nothing. The 15454 MSTP is an active tranponder system. It uses the same chassis as the 15454 MSPP. You are comparing the 15454 ITU optics with passive filters. From what I understand it is shipping and deployed now. If you kne what you were tlaking about you would know that is it does not support 32 channels in a single chassis. So, there are no heat issues. You can do 32 protected wavelengths in a 1 1/2 racks. How many does Nortel require? (3 1/2). As far as span budgets go, it has the capability to support reginal and metro rings. So with that - I'm done talking about it. I've tested it and know what it can do. Why don't you call a Cisco sales rep for a demo. c-ya
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