Chambers: Service provider market still a challenge

NEW YORK - Cisco "has a long way to go" in providing the breadth of products service providers need for offering new services and generating revenue, CEO John Chambers told investors last week.

At the UBS Warburg Global Telecom conference in New York, Chambers gave attendees a candid assessment of Cisco's progress in its key markets, including storage, voice, security and wireless (click for his slide presentation). While awarding Cisco "high marks" in enterprise voice, Chambers admitted room for improvement in service provider voice offerings.

"Service providers are starting to take hold but we need more of a systems end-to-end architecture," he said.

Cisco has such an architecture - its AVVID (Architecture for Voice, Video and Integrated Data) blueprint - for companies.

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NEW YORK - Cisco "has a long way to go" in providing the breadth of products service providers need for offering new services and generating revenue, CEO John Chambers told investors last week.

At the UBS Warburg Global Telecom conference in New York, Chambers gave attendees a candid assessment of Cisco's progress in its key markets, including storage, voice, security and wireless (click for his slide presentation). While awarding Cisco "high marks" in enterprise voice, Chambers admitted room for improvement in service provider voice offerings.

"Service providers are starting to take hold but we need more of a systems end-to-end architecture," he said.

Cisco has such an architecture - its AVVID (Architecture for Voice, Video and Integrated Data) blueprint - for companies.

Chambers also said the end-to-end systems architecture for service providers is needed to help Cisco increase its service provider business from its current 20% of revenue to 40% to 50% in five years. Cisco derived about 40% of its business from service providers as recently as three years ago before the telecom industry went into its economic slump underscored by sharply reduced capital spending.

Chambers reiterated Cisco's commitment to the service provider market and its intention to play in a large number of product and market segments, both high and low margin. One particular challenge is to add high-margin routing and switching intelligence to low-margin optical transport gear to make optical a higher-margin offering.

Cisco also is looking to transition service providers from a commodity transport business model to a more lucrative value-added application and integration business to create more demand for Cisco products in that market, Chambers said.

Read more about voip & convergence in Network World's VoIP & Convergence section.