BEIJING, China -- September 21, 1998 -- John T. Chambers, president and CEO of Cisco Systems, today unveiled Cisco's telecommunications vision for the future and outlined several opportunities for China to participate as a major player in the emerging Internet Economy. Chambers explained that the world is moving to an Internet-based economy that will deliver numerous competitive advantages for businesses towards the year 2000 and beyond.
According to Chambers, the Internet will move a productivity tool to an essential method of conducting business to gain a competitive edge. As the Internet takes hold in the telecommunications arena, he says, it will enable telecommunications companies to deliver a mix of New World data, voice and video services, helping all companies run their business more effectively, sell their products and services on-line, and communicate better to customers, vendors and employees. In addition, the adoption of New World technologies will help level the playing field for all nations and enable China to compete on a global scale.
"Voice is no longer the single driver to conduct business today," said Chambers. "Data will soon exceed voice traffic over many international circuits, and the Internet has emerged as the the new driving force. Cisco sees new competition in this arena from Old World companies, but we are uniquely positioned because of our role as a worldwide leader in networking for the Internet." Independent reports have estimated that 80 percent of all Internet traffic already goes through Cisco equipment.
According to Cisco, New World telecommunications services are delivered by new network infrastructure that is Internet-based rather than circuit-switched. These new IP-based, multiservice networks can carry data, voice, and video on a single network, reducing costs and extending reach of businesses to worldwide markets.
Multiservice networks not only provide a means to carry voice traffic far more cost-effectively than traditional circuit-switched networks, but more importantly, they pave the way for a variety of lucrative value-added services. Such services are becoming increasingly important to telecommunication service providers, especially those operating in markets where aggressive competitors are looking to capture the profitable long-distance, leased line and value-added services. These services - which range from managed services to Virtual Private Networks (VPNs) to total system integration for corporate customers - offer a valuable means for service providers to move up the value-chain.
Adoption is expected to be rapid in China. For example, Henan Province Post & Telecommunications Administration is installing a multimedia infrastructure that will provide data, voice and video services to over 100,000 users in the province. The Henan Broadband Service Data Network forms the core of the Henan Multimedia Service Network (known as the "169 Network" in China).
"As an Internet Economy company driving New World services, Cisco is well positioned to lead this change," Chambers said. "Most experts now share Cisco's view that the integration of data, voice, and video traffic will be based on Internet-based networks, not circuit-switched voice networks. I also believe that there will be a sweeping conversion of voice traffic onto data networks. To accelerate this process, Cisco has launched several initiatives to promote technology exchange between China and the United States, and help educate China's workforce which is essential to her telecommunications development."
Cisco Systems, as the worldwide leader for networking on the Internet, has enjoyed strong growth in China over the past four years. Cisco established a Beijing representative office in 1994 and has since opened branch offices in Shanghai, Guangzhou and Chengdu, aimed at providing the most advanced, networking products to Chinese customers. In addition, Cisco has contributed to the acceleration of data, voice and video integration in China by supplying advanced IP infrastructure equipment to China Telecom for the construction of ChinaNet, China's Internet backbone, the China Multimedia Network, and ATM+IP switching equipment to major telecommunications users such as China Financial Network, Henan PTA and Guangxi PTA.
Chambers visits China frequently; his last visit to Beijing was in June this year. During the past three-and-a-half years as president and CEO, Chambers has grown the company from US$1.2 billion in annual revenues to its current run-rate of more than US$8.5 billion. One of the 20 highest-valued companies in the world, Cisco has a market capitalization of more than US$100 billion. Cisco also has the world's largest electronic commerce site in the world; with a run-rate of US$5 billion, more than 64 percent of all Cisco products are purchased over the Internet.
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