In the IDG Enterprise (IDGE) "CEO Interview Series," Cisco CEO John Chambers introduced to John Gallant, Chief Content Director of IDGE, Scot Finnie, Editor-in-Chief of Computerworld, and Eric Knorr, Editor-in-Chief of InfoWorld.com, the changes in Cisco's relationship with IBM, HP, and other manufacturers as it enters new enterprise IT markets.
Your goal is to be No. 1 among IT companies, so Cisco has entered a completely different market. People know Cisco because it is a networking company and because your products compete with those from, for example, Juniper. But now you are also selling products that will compete with HP and IBM. That makes things very different, doesn't it?
We are all top-tier architecture vendors and leading communication companies. We play both technical and business roles in architecture.
In every field we have entered, we have performed well and gradually become No. 1 in that field. Even our harshest critics would commend us on this point. Our first-generation competitors were all excellent companies: SynOptics, Wellfleet, 3Com, Cabletron. These companies no longer exist today. Of course, the same could happen to Cisco if we don't implement the right market transformation in time.
Secondly, we have a healthy sense of paranoia. We know we might fall behind. Don’t misunderstand me. Although we do not fear, we have a good sense of paranoia, knowing that we might make mistakes.
Thirdly, when we started entering the carrier market, people said we did not understand carriers. Indeed, we faced some completely different competitors, such as Nortel, Lucent, Alcatel, and Ericsson. Imagine this: you intrude into this market, wanting to become No. 1? Stop dreaming. However, we made it. Despite these tough opponents, we successfully implemented the market transformation. We advanced in ways they couldn't. We focus mainly on architecture.
If you attend the Mobile World Congress, you can ask any carrier who their most suitable business partner is? Who their most suitable architecture partner is? It took us a long time to become that answer. And five or six years ago, this was almost impossible.
In the data center field, I actually didn't want to compete with IBM and HP. I tried to cooperate with them. I prefer cooperation. We felt that once we started moving towards virtualization (a decision made five years ago), it would be best if they could become our partners, so we could provide most of our technology to them. But if not, it's fine too, because this strategy is too important for us. This is not about entering a new market, and my focus is not on servers; my focus is on virtualization, where users do not need to know where your processor is, where information is stored, or where applications reside. You don't need to care about these things. If done another way, the network becomes like a dumb pipe or a commodity. Therefore, we had to enter and follow the direction of the market. We focus on market transformation rather than competitors. I think you may have some objections, but we have already had a good start in terms of mindset combination, market vision, and development strategy. Next is how to do our first take-off well.
What does Cisco perceive the data center to be like? Do you think other major vendors do not understand the data center?
It’s not a matter of "understanding" or not. It's about virtualization in the cloud and what role the network should play. We believe the network is the core part. It is not just the data center or end-user devices; it is any device, wherever it is in the world, whether it is an Apple device, a Microsoft device, an IBM device, or an HP device, and whatever content it carries, whether connected via wired or wireless networks or any combination thereof, at home, it does not matter to us.
Secondly, it is not about voice or data, but about video. You might consider this a huge overreach. But please remember again, we have been talking about the convergence of data, voice, and video since fifteen years ago when we began building a unified architecture for all three.
So, is this an overreach? Perhaps. But we started doing this early. We do it through innovation and by acquiring other companies. How exactly do large enterprises succeed in acquisitions? When large enterprises continuously acquire companies, how often do they manage to retain senior leadership, keep top engineers, bring out the next generation of products, and gain market share? The answer is: not often. We have made 137 acquisitions, and most of them exceeded our expectations. This is innovation. This is our game. It relates to market transformation and customer-driven strategies. Moreover, I understand the difficulties IBM and Wang Laboratories faced in the past. I am not passionate about technology. Most of our initiatives, including this focus on virtualization, are customer-driven. Customers first see clearly what we need to do. Then, usually through internal innovation or acquisition, we enter new markets. For instance, we entered the switch market by acquiring three switch manufacturers, and now switch revenue accounts for more than 40% of our total revenue.