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Video Driving Cisco Growth

Cisco will accellerate its move into video while also branching aggressively into collaboration and virtualization, said CEO John Chambers.

It's been two years since Cisco CEO John Chambers told an audience at a Consumer Electronics Show that "video is the next wave of Internet disruption."

At Cisco's annual financial conference this week, Chambers presented evidence that the company has executed well against that claim, even as the company prepares to step up its ongoing video drive while at the same time branching out aggressively into collaboration and virtualization, too.

"Video and collaboration are the two major moves we're going to make this year," Chambers said. "The next generation will be all around video."

Supported by a $35 billion-plus cash war chest, Cisco has made some significant company acquisitions in recent months and promises to pick up more in the future. It's just wrapping up a $3.4 billion acquisition of videoconferencing firm Tandberg. On the end-user side, Cisco's pickup of Pure Digital and its popular Flip video camera also fits neatly into Chambers' grand strategy.

He said he is sticking to his goal of growing Cisco annually at a rate between 12% and 17%. Even in the face of a worldwide recession, he said, "I am more comfortable than I have ever been with the 12% to 17% number."

Even the fact that Tandberg stockholders went to the barricades to squeeze another $350 million or so out of Cisco didn't seem to dampen Chambers' enthusiasm for acquisitions.

In a presentation, Cisco revealed some figures that underline just how important video can be: with just 500 customers, Cisco's telepresence offerings, which it calls the "flagship of collaboration business models," average 7,800 meetings a week. The services are 60% utilized in a typical 10-hour day.

Cisco's moves into new markets like data centers and servers are causing some feather ruffling among old partners like HP and IBM, but the moves are cementing other partnerships including its relationship with storage giant EMC. "The relationship with EMC and VMware is very strong," said Chambers. The firms have leveraged their 2007 partnership with EMC's VMware, and Cisco has used it to boost its virtualization activity.

One area where Cisco won't tread, according to Chambers, is the smartphone thicket dominated by Apple, Research In Motion, and Microsoft.

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