Best Buy's Anniversary Sale Samsung Could One-Up Apple Peloton Alternatives GMMK Pro Keyboard Review Natural Sleep Aids $59 Off Apple TV Equifax Error: Check Your Status Biggest Rent Increases
Want CNET to notify you of price drops and the latest stories?
No, thank you

Cisco's Chambers outlines aggressive plans

Company will add new initiatives to its "advanced technology" roster several times in the coming fiscal year, CEO says.

LAS VEGAS--The fruits of Cisco Systems' research and development labors and its aggressive acquisition strategy are apparently coming together, as the company anticipates entering several new product markets during its next fiscal year.

At a conference for Cisco customers here Tuesday, Chief Executive John Chambers said in a keynote speech that the company expects to announce it's designating a new "advanced technology" about once every three to four months in the coming fiscal year, which begins in August. Cisco's advanced technologies are product areas that it believes have the potential to reach $1 billion in annual sales.

This move represents a shift in Cisco's typically conservative public stance. The company has not announced a new advanced technology in the past two years.

"If we're not in the top five in a market, we need to partner with someone who is."
--John Chambers
CEO, Cisco

The company's existing advanced technologies are wireless, optical, home networking, storage networking, IP telephony, and security. While in aggregate, sales in these six areas make up less than 20 percent of Cisco's total revenue, they are among the fastest-growing market segments for the company and will likely play an increasingly important role in the networking giant's future.

"We made the decision in 2001 to be dramatically more aggressive in investing in new technologies," Chambers told reporters Tuesday. "At the same time, we had to realign our resources because our traditional markets were flat. But it takes five to seven years from the inception of a technology until it can reach a $1 billion run rate."

Chambers wouldn't tip his hand to exactly which new categories will be added to the group, but he gave some hints.

"Clearly, we are going to do something in the data center," he said. "And we will continue to do something with the convergence of technology."

Some people believe that Cisco's new "application-oriented networking" initiative, or AON, which will move the company beyond its core Internet routing business into messaging middleware, is a good candidate for the advanced technology label. Cisco announced details of AON and named new products associated with the initiative on Tuesday. But Chambers was reluctant to commit the new product category to the expectation of becoming a billion-dollar market in the next three to five years.

"It's still too early to tell if it has the architecture to produce that kind of revenue," he said. "The opportunity is there for this to be an industry-changing technology, but it also depends on how well we execute."

Another product area that might make the cut as an advanced technology may have something to do with integrated communications. One Cisco insider suggests the company could be looking to develop a new class of products that integrates existing radio frequency technology with IP.

Chambers referred to this new product category in a demonstration staged during his keynote speech. During the demo, he showed how an emergency medical technician's radio, which is typically built using proprietary radio technology, could be integrated into a VoIP system, so that doctors in their offices or at home could interact directly with EMTs in the field.

While it may be difficult to pinpoint what exactly Cisco will announce in the coming year, one thing is clear: The company is looking to continue its aggressive investment in new technologies. According to Chambers and his team of executives, this means continuing to develop technologies in-house as well as acquiring companies and partnering with established players in new markets.

"Acquisitions and innovation are not two separate things," said Charles Giancarlo, Cisco's CTO. "The whole point is to take advantage of growth in the market. And if we have the ability to acquire, which we do, we will."

Chambers agreed and added, "When we get into a new market, we rarely just buy one company. If you look at security, we have bought 14 companies, and we will probably acquire more. And if we're not in the top five in a market, we need to partner with someone who is."

Chambers also said that he has learned some lessons from the last round of investment in new advanced technologies, which he described as possibly having been too conservative.

"So far, we are six for six in the advanced technologies, which tells me that we could have been more aggressive," he said.