He said that the consumer electronics market is at an important transition. The last decade was about moving entertainment from analog to digital. And the next few years will be about networking consumer electronics devices together to allow people to use any device anywhere and to be able to do this as easily and safely as possible.
"We saidthat the Internet and networking would change the way the world lives, works and plays," Chambers said. "We intended that if we were successful, we'd create the ability for products to be shared across any network. We outlined a strategy for the enterprise, then service provider and commercial markets. And today we outline for you why we will be the leader in the networked home."
He emphasizedand executing its strategy to become a leader in new markets. While most companies struggle to be No. 1 in a single market, Cisco has been aggressively moving into several new markets. And in each of those cases the company has garnered first or second place in terms of market share, he said.
"So when you think about whether we will achieve our goals, step back and look at our track record," he said.
With the help of Jim Grubb, Cisco's chief demonstration officer, Chambers showed what a connected home will look like in the future. He demonstrated how a digital music system in a car could be networked to a home network so that when you arrive home, the song you're listening to in your car automatically switches to your handheld mobile device when you turn off the car. And when you come into the living room and turn on your TV, the song can continue to play there with a simple click of the remote.
Playlists are automatically synched on all devices on the network so people won't have to carry special devices with preloaded music or video from room to room. And consumers won't have to update different devices when they want to hear music. Every device will be updated automatically through the network.
While these new capabilities sound great, Chambers also noted that Cisco would help ensure that there are safeguards, so parents could control what movies or music their children were watching or listening to. And he said that even though the technology that will be used to network all these devices and services together would become increasingly complicated, Ciscofrom consumers so devices could be plugged into the network and work easily.
"Our guiding principal is to connect any device to any application in whatever mode you want, but it must be simple. And it's got to be safe," he said.
As an example, he and Grubb demonstrated how a security camera connected to the home network would automatically install and configure itself. The network would detect the camera and send a message to a home PC or a mobile device where the user would click on a button to give permission to connect the device to the network.
In addition to all the new capabilities of the connected home, Chambers noted how the new era in networking will ultimately help drive revenue for Cisco's traditional business, which is providing networking equipment for service providers and business users. The, which will create an explosion in terms of the need for network capacity. So instead of network capacity growth rates of 50 percent to 100 percent per year, it will be more like 200 percent to 500 percent growth, he said.
"By 2010, 20 homes networked together in a neighborhood will have more load across their network than the entire Internet did in 1995," he said. "This is what gets a networking person excited."
Finally, Chambers tried tothat Cisco would be a threat to their businesses. He called Cisco "Switzerland" and said the company will remain technology-agnostic and will use industry standards to build its new products.
In the end, Cisco will use acquisitions and partnerships to build its consumer and networked-home business. And through these partnerships, Chambers said, the company will create a market that will generate revenue for all the companies involved, from content creators and owners to device makers.
"We believe in collaboration for a common win-win," Chambers said. "It will be a healthy give and take...that will (ultimately) generate a lot of money for everyone involved."