Chambers: Death to PBXs

By Sandra Gittlen
Network World Fusion, 01/27/99

Washington, D.C. - Cisco CEO John Chambers told attendees of his ComNet keynote that they better not sink any more money into their voice networks.

"It's time to write off those circuit-switched networks and PBXs and move along," he said.

Instead, Chambers said it's time to build up IP networks and add voice capabilities to the mix - no doubt using equipment built by Cisco.

In one of those keynote demonstrations that actually worked, Chambers had audience members see if they could tell the difference between calls placed over the regular phone system and an IP network. Most couldn't.

Throwing voice onto data lines can save as much as five cents a minute, Chambers said. But cost isn't the only benefit, he said.

In an era when employees switch offices frequently, Chambers said using IP-based phones cuts down on administration costs. An IP-based phone connected to a router over Ethernet can automatically be recognized anywhere on a network using Dynamic Host Configuration Protocol without having to reassign phone numbers and IP addresses.

Chambers said that phasing out voice networks is just one of many things that companies need to do to prepare for the next stage in the Internet revolution.

Giving customers direct access to information through Internet databases and the like can save a company millions of dollars in support costs.

At the same time, companies have to loosen up on the IS budgets, he said. Cisco increased its IS spending from 1% to 3% of revenue this year, but it's actually saved the company money because employees can now make critical decisions faster, he said.

Chambers said much remains to be done. He said he bought his last car over the Internet, but still had to go to the dealership in person to fill out the final paperwork. People will soon begin demanding the ability to do everything online, he said.

And that will let smaller companies compete with larger companies, because they'll be more nimble in developing new online services, he said. "If you fall six months behind, even if you're a large company, you're going to lose," he said.