Chambers: MSOs’ Business-Services Agenda Motivated WebEx Purchase

Access, Wireless Bandwidth Also on Cisco’s Agenda

By Gary Arlen -- Multichannel News, 5/31/2007 12:09:00 PM

Carlsbad, Calif. -- “Collaboration” -- a fundamental factor in the Web 2.0 structure -- is at the core of Cisco Systems’ organizational philosophy and its product development, chairman and CEO John Chambers said, characterizing the company’s recent -- and uncharacteristic -- purchase of WebEx Communications as an example.

The $3.2 billion acquisition of the Internet-video presentation/conferencing service operator in March marked Cisco’s move into networked services -- not merely “plumbing,” as Chambers described his traditional business.

He called WebEx’s service a form of social networking, part of the Web 2.0 applications roster, and he said customers -- such as Time Warner Cable, a big user of Scientific Atlanta products -- “encouraged” the deal.

WebEx will give cable companies a strong tool to offer the small and midsized businesses they are courting in their commercial-services initiatives, Chambers said.

He boasted about Cisco’s focus on listening to customers in developing new products and predicted that Cisco’s “service-provider business [will] grow at 20%.”

At The Wall Street Journal’s D5: All Things Digital conference, Cisco’s effusive chief executive envisioned WebEx and other social-networking services as “driving business process” through collaborative capabilities, and he suggested that cable companies and other service providers would be able to exploit such opportunities.

There is “absolutely a movement toward consolidation” of bundled services, he said.

Chambers called Cisco’s purchase of SA last year “the best acquisition we’ve ever done,” citing the 30% “run-rate” improvement during the past year, nearly three times SA’s level prior to the purchase. He repeated his oft-used description of the synergies between SA and Linksys, its home-networking acquisition.

In his wide-ranging comments, Chambers praised the importance of HDTV, saying that it "is what’s really driving [set-top-box] growth.” But in reply to an audience query about the impact of next month’s CableCARD deadline, Chambers ducked a solid response, saying only that he is not sure of what will evolve as the security solution is implemented.

Chambers extolled the need to "create the right amount of competition” between telephone and cable carriers.

“Too much is as bad as too little,” he said, adding, “We need to get a wireless-broadband concoction.” He said there’s "a long way to go” to grasp the prospects for wireless broadband.

Chambers said, “Our definition of broadband has to change,” citing the current plan in Singapore to roll out 1-gigybyte-per-second speeds to the home. He acknowledged that such an initiative in the United States will require government endorsement.

“I would like to create the environment for a national policy,” he added. When asked why the United States does not have such an agenda, Chambers said, “Our leaders haven’t had the courage to … step out. You ought to provide a certain amount of competition.”

Chambers admitted that he was “out of synch” on the topic of network neutrality when he strongly endorsed the stance of his carrier customers. Nonetheless, he said he has “no issue with Hollywood” about its demands for access and copy protection.

“We have the capability to deliver and we have the courage,” Chambers said.

When Journal reporter and D5 moderator Kara Swisher asked “how difficult” it is to deal with MSOs, Chambers “respectfully disagreed” with that characterization, saying that the “collaboration” example showed how the “plumbing” vendor is allied and influenced by its customers.

This relationship “is not just a connected home,” he said. “It goes to business and family and friends” -- and, in the process, he referred to the advertising tag lines of Cisco’s competitor and customer.