June 20, 2006 9:25 PM PDT

Chambers emphasizes Cisco's changing role

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LAS VEGAS--Cisco Systems is transitioning from a company that simply supplies network plumbing to one that offers a platform for companies, service providers and even consumers to communicate and connect with one other, the CEO said Tuesday at Cisco's annual customer conference here.

During a keynote speech and a later press conference, CEO John Chambers emphasized the changing role of Cisco and the products it offers to its customers, which includes businesses large and small, telephone companies, cable operators and consumers.

He said the company is moving beyond just providing the infrastructure and plumbing of Internet Protocol networks, and is instead moving toward offering customers a series of products that let them launch new communications services.

"I'm proud to be a plumber," he told reporters. "It's been a good occupation. However, this plumbing is moving beyond transport."

For the past several years, Cisco has been working to establish itself as more than a switching and router vendor, which today still accounts for the bulk of its revenue. It has acquired dozens of small start-ups and some larger established companies, such as Linksys and Scientific-Atlanta, to help it address new markets. Focusing on new technologies has helped Cisco push IP technology into all facets of communication from data networking to telephony to TV and home entertainment.

Cisco has defined these new markets by calling them Advanced Technologies. And it selects them based on their potential to generate $1 billion in annual revenue within five to seven years. Some that are already named include digital video, the digital home, security, optical networking, storage area networking, wireless, hosted small business and IP telephony.

Most of the Advanced Technologies so far have been winners, with security and IP telephony already generating $1 billion in revenue yearly. Optical networking is the only advanced technology that Chambers and other Cisco executives admit has been a disappointment. But Chambers said that too much success might not be a good thing as Cisco makes the transition into new markets.

"I think our success rates in the Advanced Technologies (have) been too high," he said. "I worry that we aren't being aggressive enough and that we should have put more bets down."

Chambers said the company plans to add a new advanced technology to the group every four months. He named new segments, such as unified communications and telepresence, as strong candidates.

Cisco already has several products in its unified communications portfolio, which includes products that tie together instant messaging, presence, IP telephony and other communication services.

Chambers also said that telepresence could be a key market for Cisco, and he mentioned that a product could be available later this year. Telepresence uses high-definition voice-conferencing and video technology to create a virtual experience over a high-speed Internet connection that is as close to real as possible.

"We have a lot of seeds planted," he said. "And we'll announce new Advanced Technologies when there is a reasonable chance of it becoming a $1 billion market in the next five to seven years."

See more CNET content tagged:
John Chambers, Cisco Systems Inc., optical networking, IP telephony, telephony


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