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"For acquisitions, we go wherever there are best startups with the hottest products"

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Pravin
New Update

In your meetings with the Prime Minister and the Commerce Minister was there a thought on how local manufacturing will help in bringing prices down?

The primary goal of manufacturing is to be inclusive. It would not be beneficial in the short term and unless and until you reach scale. 6o percent of our product is ASIC so one has to think about the model and see how it is fare.

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What's your goal?

Our goal is to become number one IT company and this talks about two positions- IT and communications. We are completely moving to cloud, mobility, access, security, and Internet of things. In terms of six tier 1 IT companies, Cisco is there and we are ahead of many IT companies.

How would you manage smart grid and renewable energy grid?

This is the fourth segment of Internet where everything is digitized which is IP. We have led smart grid very well with open standard. Internet grid that handles electricity is intelligent and you can do everything. It can help in charging differently, balancing it better, monitoring electricity losses and has the ability to do it in a resilient and secure manner and also doing it right which gives us huge opportunity.

Cisco has been losing market share in core service provider routing business to Alcatel-Lucent, Huawei and Juniper. So, what is your focus in the core service provider business?

If you watch over the years no one has consistently beat Cisco in routing and switching business ever. You go 15-20 years ago where a great number of start ups IBM and Dell came at us but we put away from there. Nobody has maintained the market share almost 70 percent in total and 60 percent in enterprise with open standard and open architecture with the margins. It goes up and down a little bit but it does not dramatically change over number of years.

So, we have gained share consistently on Juniper many many years and Juniper is really struggling with new products and directions and they have no mobility strategy and the growth in routing is coming from mobile and edge. Alcatel-Lucent missed number of market transitions and if you watch they might have one or two competitive products at the edge and even the architecture is not integrated.

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So, when you talk about Alcatel-Lucent, Huawei, Juniper, and HP who is going to beat us? 2 years ago it was a fair question. Today we are gaining market share from almost all of them and this is what we have done again and again. We do this because we provide win-win situations. We are not over confident, we catch market transition, we solve customer business problems. We don't sell standalone products but we sell the architecture which goes with it and what we do is extremely competitive on a global basis.

We have 70 percent switching market share in terms of revenue and 60 percent in terms of port share and we have 50-70 percent in routing in the last two years and with the margins that we have done. And nobody has done for the last two decades. To make this happen, we combine software with ASICs, silicon, photonics, with hardware, services and architecture play with the product coming together and that's the reason we are going to beat our competitors.

What is the time frame for becoming the world's largest IT company?

Our definition of IT company is not in SAAS but in having key customers, government, enterprise and small business and adding value and becoming the most profitable company. If you ask Bharti, Walmart, BMW, defence agency in India, AT&T and BT who is their number one IT partner? The difference is in terms of solving their goals. If you do this you are profitable otherwise you are not providing value.

You in February had said that you are no longer willing to use the company's $46 billion in cash to acquire US companies until the US changes its tax code. Do you see Indian tax policies are favourable for acquisitions?

Tax policies of countries have a lot more to do with where to invest and where not to invest and I think government do realize this very well. We are hugely committed to India, US and other parts of the world but those are two big bases and it has to have a tax policy which allows us to be competitive and have a fair return. We have a policy which existed even before Microsoft existed and we have the highest taxes in the world which makes no sense and worst the tax policy doesn't help you to bring back your global earning back into the country. So you have to think about the implication of tax policy and see whether you are acheiving your goal. It's not about vision and strategy but hwat you are doing and what you want to accomplish.

For acquisitions, we go wherever there is best startups. This is something that is no longer geography based. Our largest acquisitions last year have been outside US so we will go where the best startups.are in the country with the hottest products that our customer likes and companies that fit into our culture.

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