By Fritz Nelson Vice President, Editorial Director InformationWeek Business Technology Network
CEO John Chambers says Cisco will transform, as upstart and established vendors attack its traditional strongholds.
In CEO John Chambers' words, Cisco is trying to reinvent itself, as upstart and established vendors attack its long-dominant market positions. It's fending off data center networking equipment vendors whose commodity products run on merchant silicon. It's up against vendors of disruptive unified communications products that personalize--at lower cost--what Cisco archaically calls telepresence. All the while, Cisco is clinging to a reputation for stability and quality that lingers in corporate IT organizations like last night's rock concert.
Here's the plain truth: That familiar ringing won't go away, and Cisco isn't really reinventing itself. While much has changed in the past few years--heavily virtualized data centers, mobile clients on the network, video to the handset, software-defined networks, grittier competition in its core markets from the likes of Hewlett-Packard and Dell--Cisco continues to do what it has always done, even if it's moving into new markets
But make no mistake: The price pressure is on, and Cisco feels it. "I'm probably even more worried about merchant silicon now than I was five or six years ago," Chambers allowed, "because if someone can set a fast pace in merchant silicon and other people are just focused on software, it's a different game." But Chambers said Cisco's focus on custom ASICS, underpinning a world-class combination of hardware, software, and services, has always served the company and its customers well. Cisco's "gross margins are back to where they were two years ago," he said--specifically, at 62.4% across its product lines. And he noted that HP, whose networking unit has become a major challenger, is "clearly back to where they were two or three years ago" (and he didn't mean in a good way).
One acquisition (albeit in another sector) that Cisco passed on, Chambers said, was Skype. He said he still thinks that was the right decision, as Cisco doesn’t want to compete with its service provider customers. Meantime, Cisco is doing its fair share of saber rattling against Microsoft-Skype. For instance, it has petitioned the European Union to revisit the Microsoft-Skype deal, with an eye toward setting some rules, primarily around embracing open standards for video calling. Cisco's head of emerging business, Marthin De Beer, has said the company is afraid that Microsoft will integrate Skype with Lync exclusively.
Cisco had been hopeful that it could work out a deal with Microsoft, presumably to use video calling standards, but it turns out, Chambers said, that "Microsoft doesn't see [interoperability] as important as I do." He added that when Cisco acquired videoconferencing vendor Tandberg in 2010, Microsoft was one of the loud voices insisting on the same type of video calling interoperability, which Chambers said he agreed to.
One acquisition (albeit in another sector) that Cisco passed on, Chambers said, was Skype. He said he still thinks that was the right decision, as Cisco doesn’t want to compete with its service provider customers. Meantime, Cisco is doing its fair share of saber rattling against Microsoft-Skype. For instance, it has petitioned the European Union to revisit the Microsoft-Skype deal, with an eye toward setting some rules, primarily around embracing open standards for video calling. Cisco's head of emerging business, Marthin De Beer, has said the company is afraid that Microsoft will integrate Skype with Lync exclusively.
Cisco had been hopeful that it could work out a deal with Microsoft, presumably to use video calling standards, but it turns out, Chambers said, that "Microsoft doesn't see [interoperability] as important as I do." He added that when Cisco acquired videoconferencing vendor Tandberg in 2010, Microsoft was one of the loud voices insisting on the same type of video calling interoperability, which Chambers said he agreed to.
FULL STORY
http://www.informationweek.com/news/global-cio/interviews/232601496
CISCO TELEPRESENCE AND LYNC FOR B2B
http://www.youtube.com/watch?v=5IMkFxMwnwg
