Cisco to Invest $1 Billion in Brazil

The networking and communications vendor is looking to expand its presence in a key growth market.

Cisco Systems, like many other major tech vendors, sees significant opportunities for growing business in emerging markets in such regions as Eastern Europe, Asia and South America. The networking giant is now increasing its investments in one of those areas, pledging to spend $1 billion over the next four years for a new innovation center and other technology efforts.

Cisco officials announced the investment April 2 during the opening ceremonies of the Cisco Plus event in Rio de Janeiro.

Company executives for the past several years have talked about the importance of emerging markets in expanding their businesses. For example, they have pointed to the rapid growth of Cisco€™s Unifed Computing System (UCS), noting last year that while 60 percent of the UCS business was in the United States, 20 percent was in emerging markets. In addition, when Cisco, as part of its larger company restructuring, reduced the number of management councils from nine to three, they noted that one of the councils would focus on emerging countries.

In announcing the $1 billion investment, Cisco officials said that in recent years, the company€™s Brazil operations have grown more than 20 percent each year, convincing officials to commit a significant amount of personnel and operations in the country. Cisco also has created a Brazilian board within the company to lead Cisco€™s long-term strategy in the country.

The innovation center in Rio, which will open in the second half of 2012, will be aimed at developing technologies that will be specifically aimed at addressing Brazil€™s needs in such areas as urban development, public safety and security, education, health care, and sports and entertainment. More areas of focus€”such as oil and gas and smart energy€”will be added next year, according to Cisco.

Cisco€™s urban development efforts will be around the company€™s Smart+Connected Communities work in the country, which looks to enable businesses and government agencies to access Cisco technologies through a service delivery platform. Public safety will be enhanced by offering security systems€”such as video, telephones and sensors€”on an IP platform, according to the company. Brazilian educational and health care institutions also can leverage Cisco€™s networking and high-definition communications offerings to expand their reach within the population.

"We believe in the transformative role which information and communications technology can play in the sustained development of a country and the economic inclusion of its population and companies,€ Rodrigo Abreu, president of Cisco Brazil, said in a statement. €œWith today's announcements, we reinforce Cisco's long-term commitment to Brazil and expect to become a relevant partner in this incredible growth journey the country has been experiencing."

As part of the $1 billion investment, Cisco also is creating a venture capital fund for information and communications technology to help develop new Brazilian tech companies and foster entrepreneurship. In addition, Cisco is expanding its manufacturing footprint in the country. Cisco first began manufacturing products in Brazil last year, building set-top boxes, and has expanded the plant in Manaus twice. Cisco will expand it again to enable it to manufacture products in the company€™s core switching and routing portfolio, the company said.

Cisco also will enter into more intellectual property agreement and partnerships with Brazilian companies. Already Cisco has intellectual property agreements with companies like Intelbras in the IP telephony market in the country.