Global CIO: Is Cisco Blasting To $100 Billion Or Drifting To Mediocrity?

Convince public and private decision-makers involved in these massive urban makeovers and buildouts that "the network as the platform" will indeed become the core of all that infrastructure.

How about the software partnerships Cisco will have to have, along with its own software expertise? Can it match the software muscle that IBM will be bringing to such smart-city efforts, particularly in the fields of data capture, data management, and predictive analytics?

I realize that's a tall challenge and that it's taken IBM a full decade to assemble its own software powerhouse in this vital area. But think again of the challenge in context: can Cisco become a $100 billion company in the next decade?

Cisco's revenue currently puts it on about a $40 billion run rate, and that's a terrific accomplishment. But it's still a long, long way from $100 billion and to get there, Cisco's going to need some fantastic new technologies, some fantastic new software partners and/or acquisitions, and some fantastically aggressive and well-heeled customers.

Is Cisco The Next Microsoft?

Taking the opposite outlook on Cisco's fortunes was a MotleyFool piece carrying that headline and based on this premise:

"Microsoft's following among growth investors is about as strong as its following with open-source software fans. The PC industry has matured, and Windows Server and Exchange are no longer the growth engines they once were. As for its Web efforts? Not only have Microsoft's attempts to challenge Google (Nasdaq: GOOG) and Yahoo's (Nasdaq: YHOO) leadership in the search and portal markets, respectively, come up short, but the company's Online Services division has also turned into a giant cash-burner, reporting a $2.25 billion operating loss for 2009. . . . "As with Microsoft, none of Cisco's competitors is going to eat its lunch. The IOS operating system that powers most of the company's gear is close to an industry standard, and to rework an old saying, no one ever got fired for buying Cisco. But also like Microsoft, Cisco's competitors will chip away at its growth potential. And for the time being, Cisco's much-hyped growth initiatives, such as its TelePresence platform for high-definition videoconferencing, and its UCS server platform, are too small a part of the company's business to make a big impact."

The Fool piece has a conclusion that starts with an assertion rooted in fact, which is a good thing, but then forecasts that the world at large and Cisco in particular will not change over the next several years and that both will be forever locked into what they are right now:

"Over the past five years, Cisco's shares have risen by about 47%, soundly outperforming both Microsoft and the Nasdaq," the article's final paragraph begins. "But the mere 4% gain they've had over the past two years is a whole different story—one that's probably a sign of things to come."

Well, anything's possible—witness Butler fighting past Michigan St. to win a spot in tomorrow's national championship game—but I would say that the odds of John Chambers allowing Cisco to coast ahead on cruise control with nothing new other than TelePresence and UCS are infinitesimal.

In saying that, I am by no means endorsing Ticonderoga's bullish view, which is intriguing in its sweep but also built largely on a single chunk of anecdotal speculation. China's a market with astonishing potential but at the same time it would be foolish to overlook some of the geopolitical and cultural differences that could roil relationships and that recently led Google to sever ties with that huge and complex country.

Of the two scenarios, I think it's more likely that Cisco will arc toward the $100 billion mark rather than toward the soft-food ease of the convalescent home. And along the way, I think Cisco and all the other top-tier IT companies will be giving CIOs lots and lots of new technologies to evaluate, and business opportunities and disruptions to consider, and many reasons to question and probably cast aside old ways of thinking.

And if Cisco can do that, it'll prove to be of huge ongoing value to CIOs, no matter what revenue figure it reaches over the next several years.

RECOMMENDED READING: Global CIO: Will Cisco's Revolutionary Router Torpedo Tinseltown? Global CIO: An Open Letter To Cisco CEO John Chambers Global CIO: Cisco TelePresence Shaping Next-Gen Hotels Global CIO: Apple, IBM & Oracle Get Turbocharged By Cisco Global CIO: Hewlett-Packard CEO Hurd Shifts Strategy Toward Services Global CIO: Are Oracle, HP, Cisco And IBM Too Big To Innovate? Global CIO: UPS CIO Barnes Shatters Dangerous IT Stereotypes Global CIO: Oracle, SAP, And The End Of Enterprise Software Companies Global CIO: Oracle Smart Grid Study Reveals Deep Cost Concerns Bob Evans is senior VP and director of InformationWeek's Global CIO unit.

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