Cisco: Intelligent networks to redefine business

CEO John Chambers says future lies in networks that don't require users to be tech-savvy. He also defends acquisition spree, which he says is necessary to ensure the networking giant stays ahead.

SINGAPORE--The "intelligent" network will redefine business models, and throw up new winners and losers in the tech industry, according to Cisco Systems CEO John Chambers.

Speaking at Singapore's Infocomm Development Authority (IDA) Distinguished Infocomm speaker series, Chambers said all forms of information and communications will be enabled by networks that are intelligent enough such that users do not need to know where their applications and data are stored, he added.

"The network becomes the platform of the future. And as all the things in the high-tech industry, it throws things up in the air all over again, and allows new winners and new losers," Chambers said.

To stay ahead, Chambers said, Cisco tried to redefine innovation, though not in the "old world way" of doing in-house development. Rather, Cisco's strategy was to acquire other companies.

"In our industry, 90 percent of acquisitions fail," Chambers said. "[But] out of the acquisitions that Cisco has done, literally 70 percent have exceeded the expectations of our board of directors."

This strategy, Chambers pointed out, has allowed Cisco to gain market share in 10 out of 12 major products during the company's latest quarter. "We've gained market share in every market around the world--among consumers, enterprises and service providers."

In the past two decades, Cisco has acquired over 100 companies. In its push into the consumer space, the company acquired Linksys in 2003. Last November, it also acquired Scientific-Atlanta, a cable set top box maker for US$6.9 million.

"We use acquisitions to move into new markets, and most of them work well," Chambers said.

"Scientific-Atlanta was one of the bigger ones we did," he said. "It grew [its business] from 10 to 12 percent to 21 percent one year later."

Chambers acknowledged that acquisitions are not always easy, and admitted that Cisco is still digesting its Scientific Atlanta acquisition. "But what we're also doing very well--and hasn't been done before--is we're doing start-ups inside the company and becoming the number one player."

"We did IP (Internet Protocol) telephony with an internal start-up and now have 64 percent market share in enterprise voice," he said. "We did this with telepresence, and may be the first time we've ever introduced a product and made US$1 billion within three years."