By almost any measure, Cisco Systems is the biggest fish in the networking pond. Thanks to more than 130 acquisitions, a brisk pace of internal development and a much-discussed new organisational structure that the company is using to attack a slew of new markets, Cisco's reach extends from the consumer to the enterprise and deep into service provider networks. The company offers everything from personal video cameras to high-end telepresence systems, set-top video boxes to, lately, servers for the data centre, in addition to more traditional network gear like routers and switches.
But Cisco's real ambition, as articulated by its high-energy CEO, John Chambers, is to become the most important IT company of all. In this instalment of IDG Enterprise's 'CEO Interview Series,' Chambers talked with IDGE chief content officer John Gallant, Computerworld editor-in-chief Scot Finnie and InfoWorld.com editor-in-chief Eric Knorr about the market transitions fuelling Cisco's bold strategy, what it means for enterprise customers and how the company will compete head-to-head against the industry's biggest players.
1. Q: This goal of being the number one IT company puts Cisco into a different market. People know you as the network company because you are selling against, say, Juniper on point products. But now you'll be selling a vision of IT against the HPs and IBMs of the world. That's a very different thing.
A: [We're] one of the top architectural players, as well as the top communications company, which you could argue we're in pretty good shape on. We'll play architecturally on both technology and on business.
We've had a track record in whatever markets we've entered, becoming the number one player. Even our toughest critics would probably give us credit for that. The first generation of competitors we took on were very good companies: SynOptics, Wellfleet, 3Com, Cabletron. Only none of those now exist. And, the same thing could happen to Cisco if we don't get market transitions right.
Secondly, we have a healthy paranoia. We know we could be left behind too. Make no mistake about it. While we have no fear, we have a lot of healthy paranoia about what can go wrong.
Third; when we started in the service provider market, people said we didn't understand service providers. It's a different set of competitors, Nortel, Lucent, Alcatel, Siemens, Ericsson. To think you could even play here is probably a stretch. To think you can become the number one player, forget it. And yet, we did. Those were tough competitors. But we got our market transition right. We moved in a way they did not. We did it on architecture.
If you were at the Mobile World Congress, you ask any service provider who is your most likely business partner? And who's your most likely technology architecture partner? We'll get the answer the majority of the time. Now, that was something you would have said five or six years ago was not possible.
In the data centre, I did not want to compete against IBM and HP. I tried to partner with both of them. I would have preferred that. But we knew going in - and the decision was made five years ago - once we started down the path with virtualisation, that if they would partner we'd prefer to do that, and would have actually given them a large part of our technology. But if not, it was too important strategically to us, because it wasn't a question about moving into new markets. I'm not after servers. I'm after virtualisation, where you don't know where your processors are, your information's stored, the application resides. You don't care. If done another way, the network becomes dumb pipes, commodity like. So we had to move into this in terms of where the market was going. We focused on market transition, not competitors. And I think you'd have to argue, we're off to a good start, both in mind share and vision and strategy. But it comes down to how well we do on our first pilots.
2. Q: What is it about the data centre that Cisco gets that you think these other big companies don't get?
A: It isn't a question of 'gets'. It's all about virtualisation in the cloud and the role the network plays in it. We think the network is the central piece. It's not the data centre or the end user device. It's any device to any content wherever it is in the world over any combination of networks wired or wireless to the home, to an Apple device, to a Microsoft device, to an IBM device, HP. Doesn't matter to us.
Secondly, it is not going to be about voice or data. It's going to be about video. Now, you can say that's a big stretch. But, remember again, we said before it would be all-in-one data, voice, video. [We] made that decision a decade-and a half ago and we began building them to architecturally work together.
So, is it a stretch? Perhaps. But we've done this multiple times before. We do it through innovation. We can acquire companies. How good are the large companies at acquiring companies? How many times have they acquired a company, kept the top leaders, kept the top engineers, brought out the next generation product and gained market share? The answer is: not very often.
We've done 137 acquisitions. The vast majority of them have exceeded what we told our board we would do. This is innovation. This is our game. It's about market transformation. It's about being customer driven. And, I learned that the hard way at IBM and Wang. I don't fall in love with technology. Most every move we make, including this virtualisation focus, was driven by customers. It was the customers' grasping what we needed to do. Then, it's usually internal innovation or an acquisition that kick starts you into it. Much like buying three switch companies kick started us into switching, which is now 40% plus of our revenue.