December 09, 2008, 4:44 PM — Cisco Systems will shift resources into new product areas next year, including making a major push into homes, Chairman and CEO John Chambers said Tuesday.
Speaking at the annual Cisco C-Scape industry analyst conference, Chambers laid out Cisco's plans to respond to changes in technology and the economy, which the dominant networking company says it can now do three times as fast as it did in the mid-1990s. That's thanks to the technologies Cisco itself sells, especially the collaboration tools that are at the heart of the company's current development efforts, he said.
Cisco's interest in the consumer arena has been growing over the past few years even as the company pushes the power of collaboration technologies, such as its TelePresence high-definition conferencing systems, to help companies act more quickly. Central to both of those themes is video, which has the financial benefit to Cisco of driving demand for faster and more capable networks.
With a more collaborative corporate structure enabled by its network technology, Cisco has been able to kick off 26 new businesses in the past year, Chambers said. As the economy lurches through its downturn, Cisco does not expect to cut jobs but will try to shift them into those new areas, he said. The new businesses should deliver 25 percent of Cisco's incremental revenue in the next five years, according to Chambers.
Consumer offerings, building on Cisco's Linksys and Scientific-Atlanta products, are among the areas that will see an infusion.
"We think the time has come for Cisco to make a huge play in the home," Chambers said. The company will free up resources over the next 12 months and move them into consumer areas, key among them the provision of entertainment and other rich content by carriers to homes, he said.
For one thing, it will build upon the multimedia technologies it has announced for sports stadiums and deliver an enriched fan experience all the way to viewers at home. In the new Yankee Stadium, Cisco will provide digital signs that can show game play in high definition all around the stadium and also give directions and other information. By the same token, Cisco is also working with the recording industry and entertainment companies such as The Walt Disney Co., Chambers said.
Carrier networks can be used to extend a richer fan experience to homes, Chambers said. Even TelePresence can be used, to create a group viewing experience. Cisco is already pushing enhancements for carrier video to homes, including a capability announced Monday for set-top boxes and edge routers to clear up glitches in video streaming.
Chambers did not claim to know how long current economic woes will continue.
"The depth is occurring pretty rapidly, much as we anticipated," Chambers said. But as to the length of the downturn, Cisco doesn't know, he said. Yet in the longer term, Chambers expects to see productivity rise as fast as it did between the late 1990s and the mid-2000s.
As he did previously, he predicted that changes in technology and organization will drive productivity up 5 percent between last year and 2013. As one example, he said Cisco itself cut 20 percent of its travel budget in 2007 by using TelePresence instead, and expects to cut another 10 percent this year. In the bigger picture, such technologies deliver more than cost savings, including the ability to stay closer to customers and act more quickly, Chambers said.
"We are building everything that we are doing off of collaboration [and] Web 2.0," Chambers said.
In a demonstration, Chambers showed off "MyCisco" pages that employees use within the company like an internal Facebook network. Their profile pages show their recent messages, activity within communities of interest in the company, and information about their special expertise, along with presence status on voice, instant messaging and other communication systems.
Cisco also demonstrated an extension to Telepresence: real-time translation. A Cisco employee in Spain met over Telepresence with Chambers and Vice President of Corporate Communications Architecture Jim Grubb and spoke in Spanish, and his words were translated into English and delivered in a computer voice and as subtitles. The capability will be available within a year for 20 languages, said Marthin De Beer, senior vice president and general manager of Cisco's Emerging Technologies Group, in an interview following the demonstration.