Cisco CEO Chambers Talks Video, IT Costs, CEOs of the Future

Cisco CEO John Chambers used his Gartner conference keynote to talk about Cisco's bet on video, and how IT pros can best justify costs to CEOs.

ORLANDO, Fla.-During his Oct. 20 keynote talk at the Gartner Symposium/ITxpo 2010, Cisco CEO John Chambers told the assembled IT pros and executives that video will soon be entering their businesses-whether they want it to or not.

"We believe that video is the next voice, the next data. We started with that premise seven years ago," Chambers said. "The market transition is going to take place whether we want it to, or not." He characterized Cisco's bet on video-centric networking as a potentially substantial risk-one that he was not only more than willing to take, but whose underlying technology had been under development within Cisco for years.

He added: "I think one of the important things to remember as an IT administrator or business leader is that transitions wait for no one."

Cisco's current strategy involves expanding into high-growth sectors such as cloud, virtualization and data centers. But during his talk, Chambers also focused on businesses' need to incorporate a wide variety of consumer devices within IT infrastructure-and to wrestle with the resulting security and reliability issues.

Cisco itself has "tried to limit devices," Chambers said, but "it became very obvious four years ago that we wouldn't be able to do that." That apparently helped to develop Cisco's current vision of providing network intelligence and tools capable of delivering content to users anywhere on any device, anywhere in the world. Deploying that network, in turn, involves advances in cloud, virtualization and other technology.

Echoing the previous day's keynote comments by CEO Marc Benioff, who suggested that large IT vendors have an interest in maintaining outdated paradigms, Chambers said that the transition to the cloud was something resisted by "the incumbent players" who "have very little interest in having this occur, because you sell [fewer] servers, less storage."

Chambers also took issue with the idea that a network could be run on a system of "dumb pipes" guided by a localized, server-centric intelligence. "I think intelligence will be spread throughout the entire fabric of the network," he said. "A server separate from the network [and] separate from storage ... is not the right way to approach it. I would never enter the server business as stand-alone; I'd enter it connected to the network and applications and software."

For the CIOs and other IT pros listening, however, the bigger question may be how to sell their CEO on the concept of an intelligent network-and the costs that go with it. Pressed by Gartner analysts, Chambers insisted that his company's products contribute to customers' productivity.

"You talk to [a CEO] about clouds and network and video," here he made a snoring sound. "It's about revenue per employee." Video, virtualized collaboration and other tools can supposedly make those employees more productive and fatten a company's bottom line.

For CEOs, he added, the first question is "How can I use my assets more productively?" The second is, "What are my new revenue streams?" Technology can contribute to both of those goals: "I think we're going to see an inflection point where CEOs start to talk about ... evolving technology as a constant theme."

Meanwhile, Cisco continues to push its products for both businesses and consumers. The company reported record numbers for its fiscal 2010 fourth quarter, with $10.8 billion in revenue and $1.9 billion in net income.

During an Aug. 11 earnings call to discuss those numbers, Chambers predicted that first-quarter 2011 revenues would grow 18 to 20 percent year-over-year, but also that the broader economic outlook remained uncertain: "The economy continues to be the wild card in many of our customers' minds."

Cisco's quarterly numbers also came in slightly below analysts' expectations. However, the company's product lines generally experienced growth, to the tune of 12 percent in switching, 4 percent in routers, 20 percent in unified communications, 90 percent in UCS (Unified Computing System) and 30 percent in wireless.