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Cisco CTO Q&A: We won’t be commoditized
By Phil Hochmuth
Network World, 11/29/04
Charlie Giancarlo, a 10-year Cisco veteran, took over as the company’s CTO four months ago. In that role, he contributes to and communicates the company’s overall technology strategy. What’s more, he leads Cisco’s $500 million Linksys division, which serves consumers and the small office/home office market. Here’s an edited transcript of Network World Senior Editor Phil Hochmuth’s recent discussion with Giancarlo.
Q: How are you handling the two jobs?
It keeps me out of trouble. Linksys is a very different business model. It’s one that’s of great interest to Cisco for a number of reasons. One interest is purely the products themselves. As the Internet starts to incorporate more and different types of services for consumers, Linksys will be the brand of devices that converts packets into useful services. It’s important to us from that standpoint . . . What we do at Linksys is of so much interest to our current customer base, especially to service providers, because Linksys and service providers are largely selling to the same customer base.
Linksys is also important to us because it is the first time Cisco has gone into a business that has a really different business model. So we’re learning a lot in the area of running the two different business models in the company. That’s an important lesson for us because as we continue to expand as a company, we foresee the possibility of going into yet other areas that may not only be different from a product perspective, but also from a business model perspective.
Q: What’s behind Cisco’s recent spate of high-profile VoIP wins, such as with Boeing, Ford and Bank of America?
Things have been building up. We’ve had a very large number of customers – over 40 – with over 5,000 phones. A significant number, over a dozen with over 10,000 phones, operating on a single IP environment. Cisco itself has almost 60,000 phones operating in an IP telephony environment – the largest in the world by a significant amount. Customers have been planning for quite a long time to converge their networks. That’s been happening with larger networks, and now we’re getting to the kinds of numbers that people sit up and take notice of, with [Bank of America] or Ford. What they’re seeing are cost savings and operational improvements with VoIP – all of which were promised. A long customer list makes other customers feel comfortable about VoIP. And that’s what we’re seeing right now.
Q: You’ve been evangelizing about residential VoIP services lately, but will IP Centrex types of services ever evolve the way analysts initially thought they would?
I don’t think any of us yet know exactly which VoIP business models will be truly successful. What we are seeing is that IP PBXs are a powerful concept and becoming big business. We also see that VoIP is happening in a big way in the consumer space. I would predict that half the U.S. consumer market will be on VoIP by the end of the decade – residential voice. Exactly how does that play out in the small and medium business market? I would hazard to guess that, just like with other technologies, it will be a combination of the enterprise model and the consumer model. Larger SMBs that style themselves as smaller enterprises will look at IP PBXs. Smaller SMBs may go more the consumer route, meaning they’ll look at small IP key systems with carrier VoIP service behind that.
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