Cisco's display of strength
Cisco fell hard, went through a wrenching period of reinvention, and is now stronger than it has ever been, reports Fortune's Rik Kirkland.
By Rik Kirkland, Fortune Magazine
October 31 2007: 11:22 AM EDT
(Fortune Magazine) -- Sipping Diet Coke in a suite at New York's Mandarin Oriental hotel after a day that began with a joint interview with Microsoft CEO Steve Ballmer conducted by PBS's Charlie Rose, followed by a quick march through a luncheon speech, some one-on-ones with the trade press, and a dozen customer meetings, John Chambers doesn't look or act the way you or I would - exhausted.
As the shadows lengthen over the Hudson River, Cisco's ever ebullient 58-year-old CEO is just getting warmed up. "This is the most excited I've been in ten years," he'd said earlier during his taping with Charlie and Steve. Now in his soft, 90-mph drawl he's explaining why: "I believe a new wave of innovation is coming that will make the first wave of the Internet seem small."
Beam me up: Chambers (front) wanted Cisco's telepresence product to be 'like Star Trek.' Here he's in D.C.; behind him are key execs in San Jose (from left): Charlie Giancarlo, Sue Bostrom and Marthin De Beer.
Team player: Holland is both treasurer and a co-head of Cisco's sports effort.
Telecommuter: From his home in Bangalore, Elfrink talks to fellow brass back home.
Connected: Proctor runs Cisco's collaboration technology business.
My, that does sound exciting. Example? "This will shock you," he says, leaning forward. "The other day I started the morning with my top staff in India. Then I went to Japan and a meeting with Fujitsu, then on to Cleveland, then London and a meeting with BT. The whole trip took only 3 1/2 hours, and I was far more effective in the calls."
The reason: Chambers was traveling, of course, over Cisco's latest gee-whiz product: telepresence, a high-def, life-sized, Internet-based communications system that is to traditional video-conferencing what the latest big-screen surround-sound plasma extravaganza would be to Grandma's black-and-white set with rabbit ears. "When I asked the team to design this," he recalls, "I said, 'Make it like Star Trek. You know, Beam me up, Scotty.'"
Giving companies the ability to beam the CFO into meetings or link virtual teams of engineers across the globe already looks like a winner. Telepresence, notes Marthin De Beer, senior vice president in charge of Cisco's emerging technologies group, is "our fastest-ramping internally developed new business in history."
But it's just one part of Chambers' strategy to ensure that as video, voice, and data converge on the Internet and at the same time go mobile, Cisco is selling one-click solutions that tie it all together. "Unified communications" is the buzzword for the fast-growing corporate piece of this puzzle - a piece that Microsoft also wants. But Cisco's ambitions don't stop there. In "the next big market transition," which Chambers believes is fast unfolding, the Internet will become the delivery medium of all communications - and eventually everything from security systems and entertainment to health care and education. Essentially, Cisco wants to be the world's biggest tech company, period - hardware, software, services, everything. "My biggest challenge is not growth but how well we prioritize," he says.
Let's pause to acknowledge that not everyone buys this vision. "When I heard a few weeks ago that John Chambers was excited again, I got excited too," says Fred Hickey, author of a respected tech stock newsletter. "I said to myself, 'The end must be near!'" Hickey isn't singling out Chambers. Like other tech bears, he simply doubts that talking up potent concepts - "video as the killer app" or the rise of "the network as platform" - will boost Cisco's stock, not to mention higher fliers like Google (Charts, Fortune 500) and Apple (Charts, Fortune 500), once the recession that he believes is coming pushes consumer and corporate spending off a cliff. Hickey also hasn't forgotten Chambers' role as the pied piper of the last tech bubble, in particular his insistence, as the carnage mounted, that Cisco could continue to grow at a 30% to 50% annual clip. It couldn't.
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