The networking industry is undergoing fundamental change, said John Chambers, Cisco’s CEO, as service providers transition from being simple plumbers to “total experience providers.” Quad-play will be the rule everywhere and basic transport is already becoming a low-margin commodity. Anyone operating in this environment will need new business plans, new engineering processes and an extensive set of partners.
Speaking at the company’s annual analyst meeting in San Jose, Chambers highlighted some of the macro-trends on show at last week’s ITU Telecom 2006 event in Hong Kong, including the rapid network rollouts underway in India, China and other regions of high-growth. Cisco is planning to move quickly in establishing strong partnerships in India and China. The recent selection of India as the site for a Globalization Center reelects the company’s growing activity in these markets.
In contrast, Chambers said the U.S. market has underinvested in productivity projects over the past five years. In broadband, the U.S. is also moving too slowly, said Chambers, point to Singapore, where government officials are already planning for 1 Gbps connections to the home over the next decade.
Chambers spoke enthusiastically of telepresence and networked video as the next killer app. Cisco is installing its own telepresence gear to reduce travel costs and to enhance collaboration. Another macro-trend is network virtualization. Cisco is betting that virtualization of network resource will spread from the data center all the way out to the consumer.
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