Cisco goes for fivefold increase in its new target markets

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Cisco goes for fivefold increase in its new target markets

By CAROLINE GABRIEL

Published: 20 May, 2009

In 2003, Cisco selected six key emerging markets on which to focus to drive growth and new revenue streams. Now it has increased that number to a huge 30, all unified by the common theme that they are driven by the explosion of data traffic over wired and wireless IP networks.

The company's CEO John Chambers told BusinessWeek the company is using its $33bn cash mountain to move "with a speed nobody has ever attempted". Although the core business of IP infrastructure, particularly routers, remains the heart of the business - and strengthened by the move towards what Cisco calls the "zettabyte era" of data and multimedia - it has been working on the original six new directions (wireless, optical, home networking, storage networking, IP telephony, and security). Now it is adding everything from video surveillance to home media systems to digital billboards - just about anything that can hang off an IP data pipe, and that preferably also incorporates one or more Cisco devices (putting videoconferencing in the Scientific Atlanta set-tops for instance). "No other company touches the content, the carrier, and the consumer-and the best part is they all drive each other," BusinessWeek quotes Padmasree Warrior, Cisco's CTO.

Increasingly, all these devices and data types will travel over wireless as well as wireline networks and Cisco is looking to work more closely with new and established wireless carriers, as highlighted by its recent alliance with Clearwire. It is also stepping up the mobile content of its more traditional enterprise offerings, and this week announced the Collaboration in Motion initiative, which brings video and unified communications capabilities to mobile workers. As with most of its new activities, Cisco will combine various existing products and services - from its networking, WebEx and Unified Communications units - to form a new platform that delivers collaboration to notebooks and smartphones. One of the first moves is the launch of WebEx for the iPhone.

Another hot sector into which Cisco is leaping is the smart grid. Chambers says this could be a bigger market than the internet, whose infrastructure Cisco dominates, and could be worth $100bn in the medium term. It outlined its strategy for the electricity grid, initially in the US, this week, covering routers to grid substations to home energy controllers, as the utilities look for a digital, IP-based upgrade with capabilities such as smart metering. Cisco estimates that the communications portion of that build-out will be worth $20bn a year over the next five years. Mobile operators are hoping for a substantial business too, in managing services for utilities and running smart grid apps on their networks.