The Hindu Business Line : Cisco to focus on intelligent network

THE President and CEO of Cisco Systems, Mr John Chambers, will be visiting India from October 19-21. He will be meeting with Ministers, senior Government officials, and leaders of Indian industry in Delhi, Mumbai, and Bangalore. In an e-mail interview, he outlined Cisco's strategy and the latest trends in the world of communication networking.

The service provider business has emerged as a big focus area for Cisco worldwide. What is Cisco's strategy in this space to grow its pie of the service provider spend as well as fight traditional competitors?

Service providers are an extremely important customer segment for Cisco. We believe we can work closely with our service provider partners in four key ways: to build more efficient networks as they migrate to an open, IP-based infrastructure, to deploy new innovative services that help increase revenue and customer loyalty, to accelerate demand by connecting end-user customers to the providers' services, and to optimise their business in both back office and customer facing operations for better return on investment.

For service providers, the provision of basic connectivity is just the beginning of the networking opportunity. There are many exciting opportunities in the area of home networking, storage area networking, optical, data/voice/video integration, wireless/mobility and security, just to name a few.

The speed, volume, and way in which we communicate will evolve dramatically over the next decade. In many ways we are just getting started, and both the possibilities and opportunities for service providers are almost endless. Moreover, Cisco invests 50 per cent of its R&D budget in the service provider market.

Cisco as a company has successfully driven growth through acquisitions in the past. Are acquisitions still a core part of Cisco's strategy? How many acquisitions has Cisco made?

When we do acquire, we tend to focus on small companies with innovative technologies or we look at companies that can help us enter into a new market.

Over the course of our history, we have acquired over 100 companies and over 70 per cent of those acquisitions have met or exceeded expectations.

With our newly acquired companies, we have avoided significant employee turnover and successfully leveraged the acquired firms' products and technologies to enhance Cisco's revenue and market growth.

How has Cisco fuelled innovation internally over the past 20 years?

Cisco drives innovation with over $3 billion in R&D speeding annually. Our integrated services router (ISR) is probably one of the best recent examples of internal innovation that has truly changed the market.

In addition to routing, we are making strategic R&D investments in many areas of networking such as IP telephony, service provider voice, security, wireless/mobility, cable, converged packet networks (CPN), metro optical, storage networking, and virtual private networks (VPN).

These areas are where Cisco believes it can have a major impact and that this approach is completely unique to Cisco.

When people ask why I believe in the future of our company and our industry, the answer is not based on technology alone, but on what we hear from business and Government leaders around the world.

They clearly understand the productivity opportunities and the associated standard of living implications that Internet business solutions provide. In fact, they are now truly associating Cisco, and our solutions, with productivity.

As dramatic changes occur in the marketplace, Cisco focuses its technology innovation on where the market is going, not where it has been.

Where do you see Cisco in the next five years?

Cisco will continue to focus on integration and adding more intelligence into the network. Cisco will see new technology advancements including our architectural approach to security and how integrating intelligence into the network sets the foundation for organisations to move with speed and flexibility for competitive advantage.

If you watched where we said networks would go, we said that there would be three major phases to it. First is the intelligent movement of data, voice and video across the series of network - our "network of networks" approach.

The second was the virtualisation of services and resources. The third area is application-aware networks. It has huge implications.

So, if you think of application-aware networks as the logical evolution of where we are going to go, the data centre is clearly where we see a lot of opportunity - with partners. That's the key issue. It's a different philosophy from most of our peers.

How important is India as a market for Cisco in its global and regional operations and why? How will this importance change over the next 5-10 years?

Our business last year in India was up 70 per cent year-over-year and the market share and position in each product category that we compete in are very good.

For example, two of the top three deals we finalised in the Asia-Pacific last year were in India - with Tata and BSNL, two of the largest services providers in the country.

Telecommunications in India is growing rapidly with increased deregulation and competition driving the market. We are encouraged that the Government announced its intention of unified licences for telecom players, ending service specific licensing.

With this, India will also join a group of over 80 countries where Internet telephony is permitted. Currently, India does not allow IP telephony infrastructure to be connected to public networks.

However, the Indian Government has now announced the intention of allowing this to happen - if the regulation does come through, it would provide a huge impetus to adoption of unified infrastructure amongst the enterprise segment due to huge savings.

How much has Cisco invested in India till date and in which areas?

The investment in India has gone up significantly from the $200 million that we committed four years ago. Since, my last visit to India in January 2001, we have expanded our presence in India significantly.

For example, we expanded our sales and support offices, adding offices in Pune, Lucknow, and Hyderabad, and in Colombo, Sri Lanka. We also expanded sales and support staff from 70 in January 2001 to over 100 in August 2005.

We increased our channel partner community - we now have nine system integrators. We significantly expanded R&D efforts, increasing headcount from 400 to 1,300 today.

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