RealTime IT News

Cisco Mindful of Asian Threat

Over its 20-year history, Cisco's top rivals have been other North American companies.

In a way, that's created a level playing field. Along with Juniper , Lucent , Nortel and other vendors paid about the same for engineering talent, real estate and the basic building blocks of their routers and switches.

But that's rapidly changing. For a number of reasons, China and India are rapidly becoming players in the network equipment space, and U.S. firms must act now to stay competitive, Cisco CEO John Chambers said at the company's annual shareholders meeting today.

"I believe a majority of our competitors a decade from now will be out of Asia," Chambers said in response to an audience question. "This is a trend that is inevitable."

Industry watchers attribute the rise of Asian companies to the improved IT infrastructure, low cost of production, solid education systems and a softening economic and regulatory policies.

While the trend may be inevitable, it doesn't mean Cisco and its counterparts are doomed.

"We've got to stay two, three, four, five years ahead of them," Chambers said, adding that the company is focusing on overall network systems and software rather than standalone products.

And from a national policy standpoint he reaffirmed his call for bringing broadband connectivity to all Americans at an affordable price to increase learning and productivity.

"Just because you won the first industrial revolution doesn't mean you'll win in the second," Chambers said.

On a related issue, Chambers touched upon the outsourcing of jobs to lower-paying countries. Cisco's answer to that is education, retraining employees whose jobs are at risk to other high-demand positions, Chambers said.

Chambers' remarks echoed those of others in the sector, including Nortel CEO Bill Owens.

"We see [Asian] companies competing with us in the Western world . . . in places that I would not expect them to be yet," Owens said in September, citing Huawei Technologies and others.