Executives Address Cisco's Business and Technology Strategy at the Company's 10th Annual Worldwide Analyst Conference
Cisco outlines how its architectural approach will result in new market opportunities for itself and its partners while meeting the needs of end customers
December 7, 2004
Analysts and press gathered December 6-8, 2004 in San Jose, California as Cisco executives outlined the company's future business and technology roadmap at the Cisco 2004 Worldwide Analyst Conference. The focus of this year's event was based on the theme of "Why Smart Networks Are a Smart Idea." The sessions highlighted what is driving transitions in the networking market, how end users and network usages are driving the design of the network and Cisco's blueprint for the next phase of networking for customers and the industry. We asked Cisco president and CEO John Chambers, CFO Dennis Powell and CTO Charlie Giancarlo to outline what they were focused on communicating during this event.
You've said that the networking market is in the midst of a dramatic market transition. In what way and how is Cisco approaching this next phase?
John Chambers: Customer demands are driving this next phase of networking evolution. Large enterprises understand that IT is the key enabler of business strategy and want to realize more productivity benefits through their IT investments. Service providers want to deliver profitable, differentiated services to their customers at a faster rate and view IP-based services as the key to new revenue streams and improved customer satisfaction. Small and medium businesses are looking to leverage the same efficiency and productivity benefits that large enterprises have gained and are viewing network IT as a way to level the competitive playing field. And finally, the lifestyle of consumers is becoming increasingly more connected in the way they work, live, play and learn.
These customer requirements are leading to a dynamic transition where the network will become the common architecture in business-it's where evolutionary change will occur. As an innovation leader in networking, we are evolving the role of the network from integrated transport-or the movement of data, voice and video-to a virtualized foundation for integrated IT services and applications. As the common underlying architecture across applications, services, processes and the infrastructure, the network will play a strong role in this integration.
Our vision is to lay the foundation for a transparent, virtual end-user experience, which will depend on our ability to tightly integrate technology investments with business processes, applications and services. To deliver on this promise, we are taking a global systems approach to the network by building common architectural baselines across all of our platforms. I truly believe that Cisco is positioned to leverage this market transition as the network evolves from the Intelligent Information Network into an architectural platform.
Could you outline your architectural strategy from a technology point of view?
Charlie Giancarlo: The starting point for what we discussed today is the Intelligent Information Network. This is Cisco's three-to-five year technology vision and strategy for the network's evolution from basic connectivity products to unified network systems that will serve as the foundation for a complete business architecture.
The next wave of the Internet will be driven by end user demands for new and innovative applications and services. We believe that only a global systems approach can work to handle the proliferation of new devices and resource-consuming applications that are being introduced every day. Network absorption of some of their functionality is what will make it possible for these applications to continue scaling and increasing in performance to meet the ever-changing demands. Network intelligence has never been more relevant and more advantageous to the entire system. And for Cisco, we see an opportunity to continue adding value.
The Intelligent Information Network is the only network designed with the intelligence, robustness, scalability and security to enable the entire system to scale. As a network system based on architectural principles, we believe the Cisco Intelligent Information Network gives end customers the foundation for managing the entire network lifecycle-from planning, design, implementation to maintenance-as one unified system. At the same time, it is designed to be transparent to the user, while enabling all the things they experience through mobility, security, IP Communications, and more.
The goal is to help our customers achieve their evolving business objectives and to underscore the exponential value realized when the network is implemented as a system. Customers have clearly shown that a converged network is the direction they want to go. In order for them to reap the full benefits of a converged network, convergence of services and applications will have to occur also.
What is the difference between a Cisco Intelligent Information Network and current/existing networks?
Charlie Giancarlo: Currently, networks are primarily focused on transporting bits. A Cisco Intelligent Information Network is focused on connecting people to the applications and services they want and need. An Intelligent Information Network is different from current networks because it is designed with the entire system in mind-including management and provisioning aspects- rather than designing each element in a silo. Increasing the intelligence of the network enables it to adapt to the ever changing needs of applications, rather than requiring the applications to change to meet the needs of the network.
Is the Intelligent Information Network applicable today or is it simply a strategic vision? Where is Cisco today in realizing this vision?
John Chambers: The Intelligent Information Network is our three-to-five year technology vision for moving from basic connectivity products to a global systems architecture. This is our roadmap for the future and we will continue to make investments in the network foundation and develop more awareness of users needs at the application level. This will not only allow applications to scale to meet customer demand, but will make room for innovation of new advanced applications and services. We are now in phase one-the convergence of voice, data and video onto an IP-based network. In phase two, we will start to incorporate elements of applications and operating systems into the IP network allowing scalability and performance improvement. Phase three will see the virtualization of applications and services to enable faster time-to-market for these applications and services.
How will your strategy help propel long-term growth?
Dennis Powell: We are a company committed to growth. We have a solid strategy and a strong and committed senior executive team that is focused on executing against that plan. As companies realize and develop the Cisco Intelligent Information Network and evolve networks from basic connectivity to unified network systems, we believe Advanced Technologies including wireless, storage, voice, and future advanced technologies, will drive additional growth in our traditional core markets of routing and switching.
The framework of long-term growth for Cisco includes various viewpoints including macro-economic, Wall Street, external market analysis and Cisco's internal view. These growth projections are based on existing technology markets and present a potential growth range of 10-15 percent. This growth range assumes only our currently identified Advanced Technologies; security, storage, wireless, home networking, IP Telephony and optical, along with our core business markets, routing and switching. It does not include new Advanced Technologies we may identify in the future. Part of our strategy is to continue utilizing various growth potential viewpoints, continue growing our core and current Advanced Technologies, identify future Advanced Technologies and drive growth not only through our technology revenue opportunities but also through managing our operational expenses, cost savings and increased productivity. Again, we are committed to growth, we have a strategy and we have the right management team to execute against this plan.
How is Cisco's approach different from the company's competitors?
Charlie Giancarlo: In order to make our broad portfolio of products truly run like a system, Cisco has developed a set of 'architectural baselines.' These 'baselines' comprise the first tier of an intelligent foundation, and extend through all Cisco routing, switching and optical network operations, as well as extending the network into storage, wireless and IP Communications. With such architectural baselines, we believe we can better assure the fast, efficient and dependable delivery of any form of communications over a converged IP network. To do this, we invest a great deal in developing technology-silicon, hardware, software and network management-to make this architectural system work. Cisco's architectural design is our competitive advantage.
John Chambers: I would add that our architectural approach extends beyond our technology innovation to include our underlying business infrastructure. We created a business architecture that will help our customers accelerate productivity growth and drive strategic value through hyper-integration of business processes, applications and services and networked infrastructure. This comprehensive architectural approach is our key competitive advantage because customers view Cisco as their trusted advisor. We are positioned to help them accelerate their productivity through our own proven experience and expertise given our 43 percent increase in employee productivity since fiscal 2001. We are striving to be the productivity leader in the technology industry and believe we are well positioned to help our customers to do the same.
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