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Cisco CEO Plots Acquisitions
(06/11/98; 11:19 a.m. ET)
By Shawn Willett, Computer Reseller News
Cisco said it plans to make 10 to 15 acquisitions in the next year as it ramps up to compete against carrier
providers such as Lucent and Nortel, according to Cisco CEO John Chambers.
Speaking to CRN this week, Cisco (company profile) executives also laid out plans to attack the low-end
consumer and small-office/home-office (SOHO) markets.
"At least half of those [acquisitions] are going to be in the data-voice integration," said Chambers.
He said San Jose, Calif.-based Cisco wants to be there to upgrade carriers and ISPs to the next generation of
equipment that lets voice, video, and data exist on the same line.
"Why someone would build a voice-only circuit-based infrastructure right now is beyond me. ... The main
question these guys [carriers] are asking is, 'How do I integrate voice and data, and how do I differentiate
myself in the market because of it?' " said Chambers.
Cisco's CEO did not say what companies they were eyeing as acquisition targets, but they are definitely ruling
out a merger with competitors Lucent and Nortel. "We'd prefer not to buy a CO [central-office] switch. I'd
prefer to partner on that," Chambers said.
Other Cisco executives talked about expanding into the SOHO market. In addition to low-priced hubs and
switches, the company is investing in digital subscriber line (DSL) remote access routers and modems.
"We have committed to starting a consumer market and have acquired DSL products just for that purpose,"
said Richard Steranka, director of channel marketing for small/medium businesses. The company is even
considering partnering with cable providers to provide items such as set-top boxes and cable modems.
The move toward the low end is driving another trend at Cisco: the move toward distributors. Executives said
over the past three years, Cisco has dramatically increased product revenue going through two-tier distribution.
This fiscal year, which ends June 30, revenue from the channel will reach $1 billion, officials said. That is up
from $400 million in 1997 and $180 million in 1996.
"The number of resellers we deal with directly has really gone down," Steranka said.
Despite the increased volume, Cisco said it does not plan to increase the number of distributors, which stands at
three. |
