Sunday, December 9, 2012

Cisco Seeks Top IT Vendor Spot : Tomorrow Starts Here

Cisco's ambition is to transform itself from being the top communications provider to the top information technology provider, said John Chambers, speaking at the Cisco Financial Analyst Conference Day in New York. The biggest growth opportunity for Cisco is in  providing complete architectural solutions for intelligent IP networks that meet business requirements. Chambers said the communications industry is at a strategic inflection point and that Cisco is uniquely positioned for unifying the network, compute and storage.

Here are some key points that Chambers made in the presentation:

*On Monday, Cisco is launching a new marketing campaign along the theme "Tomorrow Starts Here".  The new positioning refers to the goal of becoming the world's top IT player.

* The era of client-server is over.... it's more about mobile + cloud going forward.  It's more about selling solutions than selling boxes.

* Out of the company's 28,000 engineers, 25,000 are software engineers.

* Cisco believes it can hold gross margins steady as it makes this transition.  The long-term growth forecast remains in the 5-7% range per year.

*Being in the data center helps "pull through" the communications portfolio.

*Cisco began making its bets in this area 3-5 years ago.  Cisco is right in the middle of of key changes in Intelligent Networks. 

* Cisco's key strategy remains to Build-Buy-Partner.
* Cisco has the mentality of always being No.1 or No. 2 in every market it competes in.  Cisco must target 40% of every market you enter, or, at a minimum, 20%.
* Cisco has been successful in choosing the best partners.  Huawei has not been successful in attracting the best partners.
* Cisco has an ability to know when to stay the course in a product line and to know when to adjust or when to reinvent yourself.
* Compute, storage,  networking and applications will be distributed to every device.

* Cisco's Services have grown consistently for ten years at a 12% rate while maintaining 65% gross margins.

* Most sales in the future will be highly integrated with Services.

* Over the next few years, Services will grow from 20% to 25% of Cisco's overall business with a target of 30%.

* Cisco will base its Intelligent IP Network on ASICS + Hardware + Sofware + Services.

* Cisco believes it is winning the data center fabric race.

* The list of competitors and start-up is always long, but most of the names from 5 years ago have fallen by the wayside. Cisco believes it has blown past Avaya, Dell, HP, Juniper and Huawei this year. Cisco success is due to its ability to anticipate market transitions.

* The growth drivers for Cisco can be broken down as follows:
  • Stay the Course strategy -- Cloud, Mobility, Video
  • Invest and Adjust for Growth strategy -- Services, Security, Emerging Markets, Software
  • Future Growth & Reinvent -- Internet of Everything

* Looking out beyond the five year horizon, Cisco sees the "Internet of Everything" as the Big Play.

* ASIC innovation gives the company strategic differentiation, flexibility and time to market.  In the data center, Cisco's ASIC give it an advantage in low latency.

* Over the next 15 months, Cisco will release between 6 and 8 product groups based on new ASICS.  One of the new ASICS will have over 4 billion transistors.

* Cisco Nexus is in nine of the top ten massively scalable data centers.
* Every element in the network will have intelligence and storage.

* Nine of the ten last acquisitions by Cisco have been cloud or software plays.
The full webcast is online.

See also