And despite a slight decline in net income, due to expensing of stock options for the first time in this fiscal year, company executives were optimistic about the future of networking. Indeed, CEO John Chambers said in Ciscos earnings call, “The network is becoming exciting again.”
Cisco Chief Development Officer Charlie Giancarlo spoke with eWEEK Senior Editor Paula Musich after the call to discuss Cisco prospects and challenges.
With the ($6.9 billion) Scientific Atlanta acquisition that will close in this quarter, do you see any synergies between the Linksys organization and Scientific Atlanta?
We think there are quite a few. On a medium- to long-term basis, what we like about it is a combination of what we can do in retail and what we can do through service providers. Scientific Atlanta sells set-top boxes to service providers and we want to expand that to IP TV and DSL.
The ability to add other devices in the home, such as picture viewers, media players, cameras and so on that come through that device, is a very good opportunity#151;things that would be sold through retail, which is what Linksys is good at. The combination of those two give us a strong opportunity to be able to provide added value to service providers and to the consumer.
Is there any integration work or collaboration either planned or underway between those two organizations—especially on the engineering side?
Before you close a deal were restricted on how far we can go. We have engaged in some planning. Once (the proposed acquisition) passes U.S. approval we can start technical planning. We have done enough to know where we want to start collaborating. That work has already begun.
Does the plan to move Optical into the core routing/switching group mean that it is the first of the original seven Advanced Technologies that wont turn into a $1 billion business for Cisco?
It doesnt necessarily mean that, but we are looking at the market differently than when we started in the optical space. It is a multi-100 million dollar market. We no longer see the big opportunity for optical in being a separate infrastructure. Now itll become a part of the routing and switching infrastructure.
That market has changed from what we expected it to be, and well change in the way we operate. Some of our Advanced Technologies, if they do reach $1 billion, we may over time decide it is becoming a part of the overall infrastructure. So we may change this from time to time.
Also, with AON being added into the Application Networking Services unit, it looks like Cisco doesnt see it being as promising as it did last summer when AON was launched. Is that the case?
I wouldnt say that. When we announced AON, we said were not quite sure if it was an Advanced Technology yet. It was so new. We decided it was a part of a class of services around application acceleration in the network. The best way to classify it is with ANS.
Well be as transparent as possible in the future. I dont think we had any specific expectation of AON vis-a-vis its total size. It is an important technology, but it is too early to say how big AON will be.
Cisco has entered a lot of new businesses lately. Any businesses it plans to exit?
Good question. Other than what John mentioned today—we are going to continue to focus on the (Wavelength Division Multiplexing) aspects of optical but de-emphasize the (Time Division Multiplexing) aspects of it. We will continue to support existing products, but we wont continue to innovate around TDM integration into optical. (Cisco will focus) more around packet integration into optical.
That is a shift in our strategy. It is very hard to exit where you have customer dependencies on us. We did exit some businesses in 2001 (such as the indoor cellular wireless business), and that was quite painful.
Cisco is famous for its “marketectures”#151;SONA (Service-Oriented Network Architecture) being the latest example of that. What is it about SONA that is really significant for Cisco customers?
Several things. At a basic level it indicates the network can be a platform for services that allow enterprises to leverage other IT invests. It allows existing IT investments to stretch further, have greater efficiency or greater reach to more users or customers, and be more effective than [it would be] without the services in the network.
Cisco customers—the network people—have a role in the ongoing development of IT. The network is not just a set of dumb pipes, but their opportunity is to add more value in all the communications that take place. That includes people to people, people to machine or machine to machine. It is a statement as to the value of the knowledge base of our customers and to their future careers and value in their organizations.
Where we think its significant and what weve shown when people go through the SONA architecture are the returns they can have in improving utilization of IT environments. Those are very real and concrete, and they are measured in factors of improvement. That means lower total cost of ownership.
Does Cisco have anything to show for the joint development effort with Microsoft on (Network Access Control) and (Network Access Protection) integration? If so, what and when will we see it?
Great question. Weve not announced anything yet. Theres nothing I can share. Were not embarrassed with the progress. Soon we will identify the architectures were sharing and the progress weve made against those.
Enterprise customers are seriously concerned that NAC (Network Admission Control) isnt something you can use in heterogeneous networks. Is that true? If it isnt, what proof points do you have to reassure customers?
It will be a methodology they can use in heterogeneous networks. Like any new technology—Power Over Ethernet is an example—the innovator comes out first. Weve submitted everything we are doing to standards bodies. Theyll improve on the implementation. Itll be different than the initial implementation. Well incorporate any modifications standards bodies put into those elements of the architecture. Our intent is to make sure it is done in a standards-compliant way. It will be a multivendor environment.