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Network World - SANTA CLARA - Cisco CEO John Chambers last week outlined his company's goals, chief among them to exploit voice over IP and highlighted its biggest challenges, notably gaining success in the storage market.
Other important directions stated by Chambers and other executives at Cisco's annual analysts meeting included moving key products off their current Windows-based platforms and onto Linux, and building better multifunction, integrated ASICs to boost system reliability.
Conference attendees also were given peeks at new products. One was an application for better managing multiservice blades in a Catalyst 6500 chassis. Another offering promises to make video calling as easy as dialing a Cisco IP phone.
The CEO discussed the company's six advanced technology areas, which include IP telephony, security, storage, optical, wireless and home network products. Each of these businesses has the potential to grow to $1 billion in revenue for the company, Chambers said.
IP telephony is one advanced technology that could be at the brink of hitting this goal. This is because most PBXs in corporate networks are about 9 years old, on average, he said, and upgrading from traditional PBXs to IP PBXs is a foregone conclusion among many IT executives.
"IP telephony is one of those applications that probably in many [corporations] architecturally has already been decided," Chambers said.
Such technologies will be important factors in Cisco's stated goal of 10% to 15% growth over the next five years. But Chambers said not all the company's three major product categories - routing and switching, advanced technologies and service providers - have to become stellar business lines to accomplish this.
"If we grow two out of the three, we will do well," Chambers said. "If one does well, and two do OK, we will also get there."
In the advanced technology area, Chambers said Cisco won't acquire large competitors to boost its market share. If the company did that, he said, "that would mean that our products didn't work."
Instead, Cisco will continue to "acquire small and partner large." An example of this is the storage arena, where Cisco recently acquired switch start-up Andiamo Systems (which resulted in the Cisco MDS 9000 storage switch). Chambers said Cisco has since established partner relationships with most of the leading storage vendors, such as EMC, Hitachi, HP, IBM, Network Appliance and Veritas Software.
But storage also was highlighted as one of Cisco's biggest challenges among the advanced technologies. In a separate presentation, Cisco showed that the firm had only about 7% market share in the total storage switch market.
"Storage will be bumpy," Chambers said. "When you move into a new market, it takes some time to get down all the necessary manufacturing and channel aspects and processes up to speed."
On enterprise IT spending, Chambers said large companies are not rushing back to fill out huge purchase orders on infrastructure. Instead, companies are looking at strategic areas that can improve productivity in the short term - such as security, IP communications and wireless.
"CIOs won't sign off on anything that has more than an 18-month [ROI]," Chambers said.
He further defined Cisco's message to its enterprise customers: Businesses should stop thinking about buying point products and begin to look at network purchases (of, namely, Cisco gear) as whole systems.
"Buying separate, best-of-breed point products," Chambers said, will end up costing companies more in the end in terms of implementation and support costs.
But that notion didn't sit well with some attendees.
There are questions about Cisco's intent to get closer to customers as a services and integration company, says Frank Dzubeck, president of Communications Network Architects. "Cisco says customers aren't looking for best-of-breed products, but [products] that work together as a system," he said. "So does that mean customers have to compromise in areas where Cisco may not be the market leader in a certain technology? Who's going to do that?"
"That's a bit of a marketing spin when they talk about the idea of systems instead of point products," says Ray Mota, an analyst with Synergy Research Group. "Most enterprises already have infrastructures in place and are looking for point products for various applications."