Around the world with John Chambers
It seems as though people have always listened when Cisco CEO John Chambers spoke, and now they have even more reason to listen, given that Cisco has become just the third company ever to reach $US300 billion in market valuation. In an exclusive interview last week, Chambers shared his views on a host of issues with IDGIDG: What do you think of the sky-high market valuations of some of these Internet startups?
Chambers: When I was with 100 of my peers (at a recent event), one of the industry's real icons asked how many of us would invest in Internet stocks at this point in time. Only myself and one other person raised their hands. What the market has right is that the next generation of Fortune 500 companies will come out of (these Net startups). Some of these Internet companies - and I include ourselves in that, Sun and AOL, as well as the startups - are going to become the next GMs, Wal-Marts and GEs. So when I said I would invest, I did, and as we all know, in the last five months Internet stocks have done very well. There is a huge opportunity in front of us, but there are going to be some real disappointments in there.
What impact will Judge Thomas Penfield Jackson's recent findings of fact in the Microsoft versus Department of Justice case have on the Internet economy?
There's very rarely [an occasion] when I'll dodge a question. Microsoft is a business partner; I have a lot of admiration for Bill Gates. But I deliberately have not spent time on the findings of fact, because to express an intelligent opinion you've got to go through it and understand all of the background. So I deliberately have stayed away from commenting about the Microsoft ruling.
Irrespective of the company involved, any thoughts on the impact of such findings about a company in this industry?
If a company misuses its position in the market in a way that is inappropriate and unethical, then it ought to be held accountable. I do believe that government has a role here. There's a danger, however, that if government gets involved too often, instead of being a constructive value to the economy, it can be very destructive. So far, I've seen our government be selective in terms of when it applies Old World regulations to the New World.
What about issues such as Internet privacy and wiretapping?
There are examples where philosophies of the past can apply to the New World, but you just have to adopt them to the New World. I don't believe that government should be allowed to listen in on any conversation, whether you're on a phone or whether you're over the Internet. But with appropriate court authorisation, you ought to be able to do a wiretap just like you do a voice tap. Business must work with government. Where before I didn't believe that, I now strongly do. If we behave in a way that is reasonable, we should regulate ourselves. If we don't, then you'll find that government will.
How much of your Christmas shopping are you going to do online?
My wife does the majority of the Christmas shopping. But to answer your question, we are buying online heavily. I bought my first car online over seven months ago. I'll never buy a car again from a dealership. So we're very, very comfortable with purchasing online.
With the advent of the Internet, are private networks dead?
You're going to see a combination of networks - private networks, virtual private networks, [business-to-business extranets], the capital 'I' Internet. And you'll see those combinations not only occur in how companies do their business, but within a company. In typical Cisco fashion, we have no religion. We'll let the market determine which way it goes, and we'll adjust.
How's Cisco's internal voice-over-IP effort coming along? Have you decommissioned any traditional PBXs yet?
We are putting our own digital PBXs into our new offices and putting IP phones into new employee locations [as part of an 18-month internal rollout based on Cisco's Architecture for Voice, Video and Integrated Data (AVVID)]. We're going to do it first, and only after we've done it will we ask our customers to [roll out AVVID-based production networks]. We're up to 800 to 1000 customers in AVVID trials. I'm very pleased with the AVVID acceptance. Customers will put in place the plan and can then decide if they want to do it in two or five years. But in the end, it's inevitable. There's going to be one concentration point for data/voice/video that cannot, by definition, be a traditional PBX, the same way it cannot be a circuit switch. It's a data world.
Are the high-growth days behind the large enterprise network market?
No. But the definition of whether that growth is by enterprises purchasing internally or through service providers or other options is also something people have to be aware of. The major issue on the enterprise side is that CEOs have finally got it. In the last year, it's like a light switch went off - they understand networking isn't just about productivity, but their competitive survival. So I'm very satisfied with our momentum in the enterprise, and that's before AVVID starts to kick in. And while I think you will see a little bit of a slowdown in segments of the enterprise market this quarter, 2000 and 2001 should be very good.
With the success of the Catalyst 6000 campus switches, is the end near for the Catalyst 5000?
No. The neat thing about the way we've designed our products, with the capability to add new features and functionality, is that it allows you to protect your investment. To the indirect part of your question, are the 6000 and 4000 having some impact on 5000 sales? Yeah. But no, the 5000 should continue to sell well for us next year.
On the service provider side, how much of a setback was the cancellation of the TGX 8750 ATM switch?
For me, almost none. The press made some issues out of it. The issue that is most important for me is prioritisation and to eliminate product overlap or internal product competition. Or if an area doesn't hit the price/performance I want and I've got another product coming out pretty soon, it just isn't good business to bring out both. So I actually was very proud of the team that we eliminated some of the overlap.
Is Cisco behind in ATM switching for the Internet core?
Not anymore. It might have been a fair statement six to nine months ago. But you will see us start to announce some major wins publicly over the next month or two. I'd be very disappointed if, in that segment of the market, we don't become the number one player - comfortably - over the next year in terms of revenue and shipments.