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Cisco's CEO: Telecom was never dead.

John Chambers takes issue with story claiming the telecom industry was resurrected from the dead, saying instead the market is entering the next phase of development.

CHICAGO--Cisco Systems CEO John Chambers disagrees with BusinessWeek's recent article that claims the telecommunications industry has risen from the dead.

In Chambers' view, the telecom market is simply entering the second phase of its life cycle--a cycle he claims to have envisioned some 15 years ago when Cisco pledged to change the way people work, live and play.

"BusinessWeek got it wrong," he said. "Telecom is not back from the dead. It's merely in phase 2 of its development. In this second phase, collaboration or sharing with a large group will change the service model and drive growth on networks."

During a keynote speech here on Monday at the NXTcomm tradeshow, Chambers said that collaboration at the corporate level, along with more than 50 percent consumer broadband penetration and the rise of Internet video, will push traffic growth to between 300 percent and 500 percent per year. This is far beyond the 50 percent to 100 percent per year growth typically expected today.

This talk of collaboration and shaking up business models is nothing new for Chambers. He's been touting this message in stump speeches since the company launched its high-definition telepresence video service last year and bought WebEx in March.

Of course, Chambers' vision of a transformed Internet also helps sell the company's bread-and-butter products, the huge routers that shuttle IP packets across the Internet. In fact, he noted during his speech that Cisco has sold more than 900 Carrier Routing System, or CRS-1, routers to more than 85 service providers throughout the world due to increased traffic on the Internet.

But to drive home his point, he used Cisco's own business as a sales pitch to those not convinced that collaboration will transform how companies do business.

He said that Cisco itself is stepping away from a top-down leadership style, relying more on soliciting new ideas from employees. Already, he said, IP collaboration tools have increased Cisco's productivity. He cited the company's acquisition team as a perfect example. Last year, the company took 45 days leading up to its acquisition of Scientific Atlanta. Earlier this year, it spent only eight days closing the deal with WebEx and that was with key executives working remotely in other parts of the country.

"I'm very comfortable with the use of 'command and control' leadership," he said. "When I say turn right, we turn right. But now we are going toward collaboration. And we can move with tremendous speed."

In the end, Chambers said, the new phase of the Internet will not raise all boats as it did in the first phase. This time success will be dependent on execution, he said. For those that miss a market opportunity or move too slowly, consolidation is the answer.

"This market waits for no one, including Cisco," he said.