January 31, 2002

Cisco's John Chambers will participate as a discussion leader, a moderator, and a panelist at the Annual Meeting of the World Economic Forum (WEF) in New York, NY, January 31 to February 4, 2002. The theme of this year's summit is "Leadership in Fragile Times: A Vision for a Shared Future." Prior to the meeting, we sat down with Chambers for a glimpse into the issues that are top of mind for him: Productivity, profitability and corporate citizenship. Outlined below are highlights of that discussion.

The annual meeting of the WEF has become known as the world's global business summit. The meeting is attended by 1000 top business leaders, 250 political leaders, 250 of the foremost academic experts, and 250 other media leaders. This year, Chambers will be joined by Cisco Senior Vice Presidents Gordon Astles, Robert Lloyd, Bill Nuti, and Mike Volpi, among others. Serving as a platform for discussion, debate and action on the key issues set the global agenda, the WEF sets out to do nothing short of improving the state of the world.

Q: At this year's World Economic Forum you're participating in the forum Higher Productivity: Old Myth From a New Economy? Do you believe what the title presuming, that the new economy is a myth?
Here's what I believe: the Internet is only in its most early stages of development. We can only begin to imagine the promise of the Internet and the effect it will have on business long term. If you think about it many companies are only in the first wave of applications. What we can be certain of is that there is no other single private sector contribution to the U.S. and global economies that will surpass the impact of Internet business solutions on productivity growth over the next 10 years. The Net Impact study shows that the cumulative cost savings generated by Internet business solutions has the potential to drive 40 percent of the projected increase in U.S. productivity over 10 years, and that we are seeing similar trends in Europe. That's a powerful fact.

Q: When customers and government leaders ask you, "John, what proof do you have regarding the impact of networking on productivity?" what do you tell them?
The proof is in the productivity gains that companies like Cisco have already realized. Last year alone Cisco had productivity gains of US$1.7 billion as a direct result of customer care, workforce optimization, supply-chain management, and e-learning Internet business solutions. These solutions include new applications, added functionality, and process optimization and customer, partner, and employee adoption of Internet applications.

To further prove the tremendous impact of networking on productivity, Cisco, in conjunction with the University of California at Berkeley, The Brookings Institution, and Momentum Research, conducted the Net Impact study, which projected that no other single private sector contribution to the U.S. and global economies will surpass the impact of business solutions on productivity growth over the next 10 years. Internet applications have reached widespread adoption by U.S. organizations, and we see similar trends in Europe. Of those sampled in the study, 61 percent have implemented Internet business solutions. For large companies, those with 5000 or more employees, the implementation rate is even higher>83 percent.. And U.S. organizations that are currently deploying Internet business solutions have realized a cumulative cost savings of $155 billion dollars over a three-year period that began, on average, in 1998. I'd say those numbers are pretty powerful in terms of describing the impact of Internet applications on productivity.

Q: We hear a lot about U.S. productivity, what are you seeing elsewhere in the world?
In the Net Impact study, it was found that less than half the companies in Europe's top three economies are deploying Internet business solutions. Of the organizations sampled in the U.K., France, and Germany, 47 percent have adopted Internet business solutions. The adoption in Europe began a year later than the United States, but completion is expected to happen more quickly. Companies that have adopted Internet business solutions in the U.K., France and Germany have saved 9 billion euros (or US$8 billion).

Q: In today's economy, customers have limited budgets and are prioritizing where to spend money. Where are your customers placing their bets?
The first priority of Cisco customers is security. Especially in the wake of the 9-11 tragedy and recent Nimbda and Code Red viruses, security issues have risen to the top of everyone's mind. The second is the convergence of data, voice, and video networks to a single IP network, which includes telephony, virtual private networks, and content delivery networks. We are also seeing companies focus on applications that extend their reach and increase productivity. In this economy, productivity and profitability are the keys to survival, along with a company's ability to generate cash.

Q: You are serving as a panelist in a session dedicated to corporate citizenship. Can you tell me how the economic downturn has affected Cisco's outlook on philanthropy?
Corporate citizenship has been, and will always be, an important element of Cisco's culture. Our philosophy is that stronger global communities create a good business environment. Corporate endowments provide self-sustaining models over the long term>regardless of the economic peaks and valleys. Foundations such as the Cisco Foundation, a corporate endowment that is a self-sustaining model over the long term, are tied to Cisco's business strategy, leveraging our partnering skills and Internet expertise and Internet-focused programs. The Cisco foundation concentrates on initiatives such as e-philanthropy, the use of technology in nonprofit organizations, education, and individual and employee engagement. We are deeply committed to children's education through the use of Internet technologies, which I truly believe are the two great equalizers in life.

Q: We've heard you say this before - that the two equalizers in life are education and the Internet. Often, education can be linked to better access to the Internet. But many people still don't have electronic access. What's the solution?
The solution involves strong, two-way partnerships. When corporations combine their own expertise with a partner whose expertise is a complement, it's a win-win situation. For example, Cisco leverages its partnering and Internet expertise by joining with organizations such as the United Nations, which has access to organizations and people in developing countries. Together, we create programs such as the Least Developed Countries initiative, NetAid, the Cisco Networking Academies, and the Gender Initiative to enable Internet access for the people who need it most. But the key to success is really equal broadband access to people worldwide. I truly believe that broadband is the key to future global economic growth, bringing Internet-based services to entire countries, improving educational opportunities and the standard of living across the globe and creating a level playing field for all people and countries worldwide.

Q: What would it take for there to be universal access to the Internet and what would the impact be?
As I said, broadband is the key to economic growth. With the right policies and leadership, industry and policymakers can work together to enable millions of people to take advantage of the opportunities I've already outlined with the delivery of broadband access. And the way to fully realize the promise of broadband begins at home, in the United States. Currently the United States is the only G-7 country without plans to spur investment in broadband. Britain, Canada, France, Germany, Italy and Japan are way ahead of us in this area. But with initiatives and organizations such at TechNet, of which Cisco is a cofounder and participant, we are bringing these issues to the forefront of politicians in the U.S. to encourage broadband growth.