Cisco's Big 2010
It might come as a surprise, butCisco Systems has attended the Consumer Electronics Show for the past seven years straight. And in my exclusive interview with CEO John Chambers earlier this morning, he says this year could be a watershed for his long-term strategy.
Chambers says Cisco has always been known as the "plumbers" of tech, building out the pipes that send information along the network and get the bits and bytes where they need to go.
But for the past several years, the company has been putting the pieces together for a soup-to-nuts approach to all kinds of technology, starting with the network, focused on video as an entertainment and communications medium, and offering devices up and down the food chain.
Last year was a challenging one for broader technology, so it's no surprise that it was Cisco's most aggressive acquisition and expansion year ever, Chambers says. Fact is, Cisco has spent its way through the last five or six downturns and did so in spades again last year.
But unlike years past, Chambers says this year will yield a big payoff. He says consumers and enterprise customers alike are embracing the opportunities the network is offering. Carriers are coming after Cisco in a big way as they build out higher speed networks to accommodate all that smart phone and netbook data traffic; consumers are devouring the Flip video cameras that Cisco acquired from Pure Digital last year; the company's Starent acquisition is being looked at, says Chambers, as a stroke of genius; and while the Tandberg deal hasn't closed yet, and will be dilutive in its first year after it does, Chambers expects it to deliver, and big.
Cisco seems to be embarking on a strategy pioneered by Intel—seed the market with technology embraced by manufacturers and the enterprise, and then spend a huge amount of money getting the brand acquainted with consumers. In that respect, it's playing catch-up with more established consumer names like IBM and Hewlett-Packard , it seems to be making enormous progress.
Meantime, with better than $30 billion in cash still on the balance sheet, Chambers assures me Cisco's aggressive acquisition strategy will continue this year. And that has tongues wagging as to who might be next in the company's crosshairs.
While Dell has come up a number of times as a possible target, Chambers says it's just not in the cards; he respects the company, Michael Dell is a good friend, but the synergies just aren't there. Same goes with Palm , by the way. Cisco has bigger fish to fry, and more pieces of the broader, video-on-the-network strategy; virtualization; smart meter green technologies. That's where Chambers sees the big possibilities.
Chambers seemed relaxed, happy, and more than merely confident. Kinda' reminded me of one of those guys you studied with in college who just knew his stuff, studied well and was well-prepared. No need to read more or stay up later. Chambers is that guy, 2010 is his test, and it seems like he's ready to ace it.
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