Cisco Envisions an Intelligent Information Network

SANTA CLARA, Calif. — The focus for Cisco Systems in 2003 is to build a network of what it calls “Intelligent Information Networks” based on their systems.

The San Jose, Calif.-based computer-networking equipment maker Tuesday said it is planning on spending $1 billion on new growth markets and an “aggressive” combination of strategic partnerships and acquisitions. CEO John Chambers said he is banking on Cisco capturing either No. 1 or 2 of market share in the dozen or so new areas the company is expanding in, such as storage, IP telephony, video, cable, converged packet networks and wireless.

“Make no mistake about what’s on the CEO’s mind today,” Chambers said as he rolled out the company’s roadmap before analysts. It’s about companies that seek to improve productivity and profitability.

Cisco is also earmarking $3.3 billion in R&D to help advance IP/MPLS core, Service Aggregation and ATM/Frame/Metro Ethernet architectures.

“We’re just scratching the surface of what we can do with our networks. We’re looking forward to a network of networks.” Chambers said. “A few years ago I was the pessimist. I thought we were entering the 100-year flood. Today I’m the optimist. It’s part of understanding that putting the systems and the applications in data centers without making certain changes will not change the process. But, if you think that productivity can only grow at 3 to 5 percent a year, you aren’t going to make any profits.”

Chambers said his company would stay the course with its core routing and switching technologies, but would continue to expand its presence in storage, voice, wireless and security markets.

Whereas Cisco has pummeled the routing and switching competition like 3Com , Nortel and Juniper , Cisco will have a harder time in conquering some of the company’s break out areas even with its joint partnerships like the ones with EMC and Oracle.

“I like what (Chief Development Officer) Mario (Mazzola) and his team have done with storage,” Chambers said. “But, it will be another 9 to 6 months before we can tell how well we’ve done.”

Chambers said Cisco would still focus on selling to its usual suspects (service providers and the telecom industry), while keeping abreast of market transitions and making evolutionary changes as to avoid getting “blindsided” like the company did during the downturn.

“There is no question that this is going to be a packet-based culture with common building blocks,” Chambers said “This market has moved from a box-by-box environment to a networked one. Our job is helping the customers make the leap from our innovation to the intelligent information network.”

Reaffirming its position that it outlined last year, Cisco said it is still focused on what it calls a “Network Virtual Organization” or VPNs as a way to streamline worker productivity and create revenue through outsourcing.

“The decisions we make today will affect the course of networking in the next 12 to 24 months from now,” Chambers said.

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