January 7, 2003 2:42 PM PST

Cisco readies marketing push

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Network-equipment manufacturer Cisco Systems will launch a multimillion-dollar North American ad campaign early this year, hoping brand recognition, and not price cuts, can beat back new competition from makers of less-expensive gear.

Speaking at a conference Tuesday, Chief Executive John Chambers would not directly address the issue of possible price cuts, but he acknowledged the competitive threat and announced the $150 million campaign. He also said Cisco would continue pushing for new partnerships.

"We won't just play defense, we will play offense as well," Chambers told investors at the Morgan Stanley Software Services, Internet and Networking Conference in Scottsdale, Ariz.

Cisco sells more routers and switches, used to direct Internet traffic, than any other company. But new manufacturers selling cheaper equipment have recently come on the scene, and analysts have said they believe Cisco will eventually have to take steps, including cutting prices, to deal with the lower-priced competition.

Chambers singled out threats coming at the company "from below," including efforts by Dell Computer, which began selling switches in late 2001; Huawei Technologies, China's largest telephone equipment maker; and other Asian manufacturers.

The CEO said Cisco will beef up its advertising and marketing presence with print and online ads beginning sometime in the next three months.

He also said Cisco intends to nail down more partnerships with computer network equipment sellers. On Tuesday, the company announced that IBM will sell Cisco's MDS 9000 line of high-end switches, which connect storage systems to servers in special-purpose "storage area networks" (SANs) separate from usual computer networks.

"We prefer to partner," Chambers said. Tuesday's IBM deal "is indicative that strategic alliances, if done right, are one of the key factors separating companies."


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