The outer limits

Cisco’s market strategy has been aggressive to say the least – but CEO John Chambers is determined to push the company even further, with new drives on emerging markets and emerging technology. Eliot Beer finds out how the company intends to achieve its ambitious aims.

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By  Eliot Beer Published  July 2, 2007

If you agree with everything I say, I've failed," says the small, rather dapper man with a pronounced Southern US accent. Cisco CEO John Chambers is keen to challenge his audience - apparently as keen as he is to challenge the market, Cisco's shareholders and his own employees.

Chambers' ethos of challenge and confrontation is easy to see writ large in Cisco as a whole. Some of its recent activities - such as its major focus on emerging markets - seem like clear masterstrokes. Others - such as its determination to rebrand itself as almost all things to all people, or so it seems - seem dubious, and likely to fail. But Cisco isn't good at failing.

The vendor has never been afraid to court controversy either - its critics are legion, among IT professionals as much as competitors. And its dramatic silencing of Mike Lynn at Black Hat 2005 left a bad taste in many mouths.

Rather worryingly, all the bad stuff fades away at the heart of Cisco's Executive Briefing Centre in its San Jose headquarters. The enthusiasm of the vast Cisco team is almost palpable, and a certain hypnotic quality makes itself felt - don't worry about all the controversy, Cisco's great.

Hypnosis aside, Cisco's overall approach is impressive by any measure. There are - literally - too many projects in the company to count; the company's emerging technologies division maintains an internal Wiki, with thousands of proposals for cool new systems.

From all the initiatives going on at Cisco at the moment, the two biggest areas by far seem to be emerging technologies and emerging markets. While both seem like smart moves, the obvious question is how will a focus on emerging technologies benefit countries which are just building out an IP infrastructure for the first time.

"The emerging markets actually lead on adoption," says Chambers, countering any suggestion Cisco might alienate developing countries with high-end offerings. "When Huawei came in and competed purely on price, at first that took us a while to adjust to. But then we realised the real value in emerging countries is they want to make the technologies not just work, but to link it to their government and economic issues.

"Now we're gaining market share in all the emerging countries except China versus Huawei. It's not the price of a product - it's the cost of a service and the value you bring with it. In India, which is one of the most price-sensitive markets in the world, we grew 50% last quarter and we have almost 70% market share across the country."

Cisco's emerging markets strategy is - typically - ambitious, but driven by a very practical examination of the regions which are set to drive global growth in the coming decades.

"We've seen a shift from the northern countries to the southern countries - from the developed world to the developing world," explains Julian Lighton, vice president of business development at Cisco Emerging Markets. "As we've seen this shift occur over the last 40 years, the importance of networking has increased - the established pathways have all been north to north, have been between the developed world.

"Over the past 20 years, we've seen the pathways begin to switch, so it becomes north to south. But in the next 20 years, it will increasingly be south to south that will be important. Africa trading with the Middle East - the Middle East trading with Asia-Pacific - Asia-Pacific trading with Latin America."

This fact seems to be borne out by the 40% growth the emerging markets division is experiencing within Cisco - albeit from a relatively small base. And unlike many vendors which merely pay lip-service to developing countries, Cisco has put its money where John Chambers' mouth is.

Chambers' enthusiasm for the emerging markets is clear - even when not in the company of Middle Eastern press, he highlights the developing world as the key driver for Cisco's growth. The Cisco CEO's respect for Saudi Arabia is very apparent - Chambers describes Sagia governor Amr bin Abdullah al-Dabbagh in glowing terms.

"My major challenge in Saudi Arabia is keeping up with the King's view of how things need to evolve and how fast it's going," he says. "It's the only country I've ever been in my life where, just when I think I'm catching up and beginning to lead, they say ‘Ok, that's good - but we want you to do more'.

"I say that kiddingly, but Saudi Arabia has one of the best business leaders in the world in governor al-Dabbagh," Chambers adds. "He's rated one of the top 100 business leaders of the future. The King and royal family understand the transition, and the value to the Saudi Arabian people, in terms of how they can not just participate in the global economy, but lead it."

Chambers is enthusiastic about the Kingdom's attidude: "You watch Saudi Arabia - they'll lead the world in using this new technology. Who would have said that two or three years ago?"

Cisco is clearly in a state of major flux - it is working hard to adapt to a changing global economy, and it is not doing this change in stages. Chambers rejects the idea that the company is an aircraft carrier: "If I tell it to turn right, it turns right".

The company is expecting failure - its emerging technologies division is built on the concept. In its overall strategy, Cisco is taking risks, and it seems likely that not all its corporate gambles will pay off.

But its acquisitive strategy, which it has now honed to a fine art - the recent WebEx purchase was completed in six days - is set to continue in the long term. And Cisco's push to target every market sector at once doesn't yet seem to be overwhelming its workers.

Frustratingly for its detractors - and its competitors - we can expect to see Cisco remain at the top of the IT tree for some time to come, and pushing its limits as hard as it can.

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