Navigating through volatility can be tricky. There?s the global economy to worry about and cuts in government spending around the world tend to eat into technology budgets, further compounding a company?s woes. However Cisco Systems Chairman & CEO John T Chambers, once hailed as ?King of the Internet?, is at his best at times of the most adversity. He is considered the miracle man in tech circles for having helped with the dramatic turnaround at the American tech behemoth. With a little bit of luck, the modest CEO admits, the computer-networking equipment maker is still on top of most product categories. It has more than held its ground against competitors and has not lost a customer during the year.
But Chambers has always been in the eye of the storm. Few might recall that in March 2000 Cisco, with a market capitalisation of $531 billion, was the most valuable company on the planet. But then disaster struck and Cisco underestimated the effects of a major economic recession and was soon facing financial crisis. Fortunately at such troubled times, the company found in Chambers a visionary leader that could turn the company around to a profitable future. He has helped grow the company from $70 million when he joined Cisco in January 1991, to $1.2 billion when he assumed the role of CEO, to its current run rate of $40 billion.
In terms of the bigger picture, Cisco is in the right markets?mobility, video, cloud and the social networking segment. With a strong focus on emerging markets, it is moving very aggressively in India in terms of investments and positioning its products and solutions for customers here. It is also innovating locally to be more relevant to its customers and partners. In a wide-ranging interview with BV Mahalakshmi in San Diego, the Cisco supremo provides a compelling look into new technologies and his plans to intensify operations in India. Excerpts:
What is the thinking at the Cisco management level to improve market share in emerging markets like India?
Over the past few years, we have built a significant presence in India. The Globalisation Centre East (GCE) was established in Bangalore as Cisco?s second headquarters with a view to globalise talent, innovation and growth. Today, the GCE is the second biggest R&D centre for Cisco globally. The facility has also enabled us to effectively address opportunities outside of the country that would otherwise be difficult.
India is one of the largest emerging markets in the world for Cisco and we are strongly committed to India?s growth story. We are very bullish on India in the long term. Strengthening our market position in such high-growth markets is an integral part of our strategy to drive growth for the company. We currently have over 8,000 engineers in India and continue to invest in talent and development.
What is the strategic importance of Asia which has fast growing markets like India and China?
Emerging markets are a key focus area for Cisco and are extremely attractive for us. About 20% of our revenue comes from emerging countries. We expect this market to grow two to three times faster than more mature markets to eventually contribute about 30% of our business within the next few years.
But decision-making seems to be sluggish in India…
It is true that there is slow decision making in public sector and telecom verticals in India. There is also an overall cautious approach to IT spend in the markets there. India might throw some short term challenges, however, we do not think these are long-term issues. Mega technology trends such as bring your own device (BYOD), cloud, mobility and video will mean enterprises will continue to invest in technology products and solutions.
What?s your stance on acquisitions? Are you bullish on them?
Acquisitions are part of Cisco?s DNA. They have helped us grow into new markets that now represent 30% of Cisco?s total revenue. It is important to note that this is only one component of our innovation strategy that also includes internal R&D and partnering. So as you can see, our innovation framework is to build, buy, partner and integrate.
What can customers expect from Cisco in the next 6-12 months?
Cisco will continue to focus on our five priorities of core networking and services, datacentre and cloud, video, collaboration and business architectures. Integrated throughout our product portfolio are security and mobility to ensure our customers transition securely and effectively to the mega trends that I had identified earlier.
Are you tailoring products and solutions specifically for the Indian market?
In terms of the bigger picture, India will be a major contributor to the growing internet traffic. India is expected to have two billion networked devices by 2016?double from devices in 2011 which stood at one billion. The internet traffic in the country will grow at a compound annual growth rate of 64% between 2011 and 2016. Internet video will be 70% of all internet traffic in 2016, up from 30% in 2011, and mobile internet data traffic will grow 58-fold between 2011 and 2016, at a CAGR of 126%.
At a high level, what?s most exciting is that many of the market transitions we anticipated and prepared for are happening. The network is becoming the platform not just for all forms of communications and IT, but it?s enabling heightened levels of productivity around collaboration, it?s revolutionising the datacentre, changing the way healthcare and education are delivered, and is at the centre of everything from security to video. Cisco is strongly positioned to support our customers through these market transitions.
With trends like bring your own device (BYOD) and cloud computing, how do you see network security evolving?
Network security will gain prominence as the amount of data increases. We will see convergence of elements such as firewalls, content security, and policy and identity management. Seamless connections and context-aware security will help recognise who you are, what you are supposed to have access to, what device you are on, and where you are globally, and then provide access accordingly. Additionally, IP-based physical safety and security will also continue to gain prominence.
