Cisco CEO preaches at ComNet

CEO John Chambers proclaims networking to be the driver of technological change through the end of the century and beyond at ComNet '97.

CNET News staff
3 min read
WASHINGTON--Cisco Systems (CSCO) president and CEO John Chambers proclaimed networking to be the driving engine of technological change through the end of the century and beyond at his ComNet '97 keynote here this morning.

The leader of the San Jose, California-based powerhouse of the internetworking industry said the challenge facing companies in the fast-moving Internet age is how to make information available for competitive advantage to customers and partners. Those who do not find solutions, warned Chambers, face irrelevancy.

Chambers, who speaks with a Southern twang, charted a historical course that saw the mainframe dominate through the 1960s, the minicomputer and wide area network dominate the 70s, and the PC-based local area network dominate the 80s. Through the 90s, the network will be at the core of change in computing, he said.

Companies will see "growth, competitiveness, and even perhaps survival" tied directly to how technology is used to reach employees, customers, and partners in this era. "The network is going to change the way businesses operate, the way we work, and the way we play," he said to a half-full hall on the last day of ComNet '97.

As an example, Chambers used his own company's Web site, which has accrued over $250 million in business savings, 500,000 logins per month from people looking for jobs, and 13 percent of revenues for January from purchases of networking equipment, a significant sum for a $4 billion company.

He said the primary beneficiaries of Internet commerce over the next few years will be companies doing business with other companies. Cisco expects to pull in $2 billion from online purchases this year, and Chambers predicted that will grow to an astounding $7 to $15 billion by the year 2000.

International Data Corporation has pegged the Internet commerce market at more than $160 billion by the end of the century. Other consultancies have offered more conservative figures in the $50 to $80 billion range.

Cisco Systems has had a wild ride on Wall Street lately, seeing its stock drop four points yesterday in the aftermath of an earnings announcement that met analysts' ambitious estimates. But Chambers chose to focus on the opportunities found in a networked Internet era and how quickly this era will grow and change the way business is done.

The Internet/intranet market is expected to grow to $50 to $60 billion by the year 2000, according to a recent Forrester Research report. Cisco Systems, coincidentally, sells networking gear such as routers and switches that serve as the core of online and internal networks.

The company has continued to thrive despite several challenges to its industry dominance. Rival 3Com is increasingly nipping at its heals, and a variety of companies are developing switching equipment for the plethora of networks based on IP, the communications protocol of the Web, that undercut the current dominance of routers. Cisco has more than 60 percent market share in the router market.

But Chambers discussed market opportunities in his speech, rather than promoting Cisco's own IP implementation that keeps routers in the mix called Tag Switching, for instance.

To prove the pervasiveness of networking and the Internet, he used several examples to press his case for connecting companies globally, pointing out that at colleges, term papers are now handed in via email and the traditional library has been replaced, in large part, by the World Wide Web. Company meetings will soon be done in a virtual manner using videoconferencing capabilities that offer a cleaner picture than currently available.

He noted that three years ago, he met with a company in Japan and knew it was going to be a long meeting when he noted that the business card given to him did not include an Internet or email address. That situation in Japan has obviously changed, just as it has in every corner of the globe. "It's almost socially unacceptable not to have it," Chambers said.

The market opportunity is obvious, observed Chambers, but the networking industry will see a consolidation as network professionals and chief technology officers choose to use fewer companies to provide equipment and services for their networks. For this reason, partnerships between companies who normally see themselves as rivals will be a key factor for company survival. "Our industry is moving too fast for us to do it ourselves," he added.