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4/4/2010
05:12 PM
Bob Evans
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Global CIO: Is Cisco Blasting To $100 Billion Or Drifting To Mediocrity?

One study says Cisco's best days are gone but another says its "Smart+Connected Communities" will drive massive growth: what's it all mean for CIOs?

In spite of its vast and mercurial product mix and strategy, Cisco's financial track record and the ongoing leadership of longtime CEO John Chambers would seem to make it difficult for an analyst to convincingly describe how the company would allow itself to begin bumbling its way toward irrelevance. What type of malaise, what type of tragic missteps, what sort of un-Chambers-like strategic blunder could force Cisco into the assisted-living neighborhood of the IT community where it settles in with other companies that are not only too big to fail but also too muddled to matter?

Conversely, is it possible to project a scenario over the next several years in which Cisco exploits some of its new global initiatives—TelePresence, smart grids, consumer products and services, and most of all its Smart+Connected Communities—so successfully that it can become a $100-billion company?

Such speculation takes on some real significance for a few reasons:

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a) Cisco is arguably among the Top 5 and unquestionably one of the Top 10 most-strategic IT vendors in the world, and it can rapidly accelerate the development and evolution of new categories and technologies by deciding to be a major player. And that, by extension, has an incredibly impact across Cisco's competitors, partners, and customers.

b) It signals new opportunities of a type that constantly reset—or eliminate—the long-established boundaries of what IT is, what business-technology is, and over what range CIOs should attempt to be engaged or even lead companywide initiatives.

c) Over the past year, we've seen several of the largest and most-influential IT vendors remake themselves and move into sharp competition with companies that until very recently were close partners: Cisco get into servers and storage while Hewlett-Packard goes all-in with networking gear and Oracle becomes a high-end systems company and IBM, after stepping back a bit from the hardware business, recommits itself aggressively from chips to mainframes. Plus we've seen a series of flanking moves by Microsoft (with HP), SAP (with IBM), Cisco (with EMC) and others, all of which serve to remind us that the fairly stable and predictable IT marketplace we all knew for so long has become a thing of the past—and accordingly, CIOs would do well to rethink very carefully the long-term implications of current and future partnerships with those major IT suppliers.

For Cisco, two sharply divergent analyses of that long-term future emerged last week and we'll take a look at each to help stimulate some CIO-level thinking about what you might (or might not) expect from Cisco in the next few years. First, the bullish view:

How Cisco's Revenue Could Hit $100 Billion.

That was the headline over an article late last week on Barrons.com but written by two stock-researchers at Ticonderoga Securities, who are pegging their predictions on Cisco's foray into helping create highly intelligent, interactive, and interconnected cities.

From that article:

"Cisco's Smart+Connected Community initiative remains in the early stages with no revenue recognized just yet," says the Barrons article from Ticonderoga Securities. "However, we believe that the long-term potential could be meaningful with a greater focus on the developing markets. Cisco estimates that 500 million people will be added to cities around the world over the next five years, while more than 100 new cities will be created with over one million residents by 2050 that will drive trillions of dollars in infrastructure investment.

"With the network as the platform vision, Cisco is leveraging products, partnerships, solutions and services in areas such as Smart+Connected Real Estate, Smart+Connected Utilities, Smart+Connected Transportation, Smart+Connected Safety & Security, Smart+Connected Learning, Smart+Connected Health and Smart+Connected Government."

Clearly, these are some intriguing market opportunities for companies like Cisco and IBM, which triggered the entire "smart" movement more than a year ago. For Cisco, that opportunity could be particularly sweet if it is able to do the following:

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