CISCO: Chamber's Partnership Model

On his second visit to India, John Chambers, president and CEO of Cisco
Systems focused on collaborative/partnership model. And it seems this model will
help the company achieve a minimum 30% plus growth rate every year from 51% at
present that the company achieved in FY 2004-05.

In terms of investment, Chambers announced $200 mn in 2001, whereas on his
second visit to India, the magnitude of investment was more than five times. The
company announced investment to the tune of $1.1 bn over the next three years,
and this is the largest investment made by Cisco outside US. This is also the
most comprehensive investment highlighting the growing importance of India in
the global economy. The investment focuses on R&D, vendor financing, VC
funding, customer support, e-governance and next generation network. A closer
look at the investment will reveal that the investments do have
collaborative/partnership model built into it.

R&D: Investment to the tune of $750 mn and includes R&D
activities, development, and staffing over the next three years. The company is
planning to increase its base from 1,400 to 3,000 in the next 3 years of which
majority will be for R&D. Even Cisco's own R&D activities will be
complemented through work done by strategic partners like Zensar, Wipro, Infosys
and HCL. So, the collaborative model will help the company bring out cutting
edge products in the worldwide market.

John Chambers, president and CEO of Cisco Systems and Dayanidhi Maran, Minister for Communications and IT

Cisco Capital: $150 mn will be dedicated by Cisco Systems Capital to
provide leasing and other financial solutions to Cisco's customers. Here the
focus is more on large enterprises and service providers. On the enterprise
side, Cisco is targeting companies in the financial, manufacturing, government,
and BPO space. Here, the focus is on helping companies to go for cutting edge
technology through vendor financing and also not worry about technology
obsolence at the same time.

Venture Capital: $100 mn will be earmarked for investment in start up
companies. Here the focus is on networking companies that are critical to Cisco
and also the service provider community. Till date, Cisco has invested only in
India Games. Here, investment is close to $2 mn for a 10% stake. Here, Cisco is
planning to nurture tech start ups to come up with excellent products thereby
helping them to grow during initial stages. More on collaborative model.

Customer Support: $100 mn, of which significant portion will be
allocated for technical services, spare parts depot, channel development. In
this case, the focus is more on internal improvement so that they can spread
their wings from present 100 odd cities and 1,511 channel partners to a bigger
number in future.

E-governance: Another feather on the collaborative front is Cisco
signing up with the Ministry of Communications and IT to support India's
National E-governance plan where the focus is to create broadband infrastructure
and enable the government to connect with its citizen and help in bridging the
digital divide. Under the program, Cisco will provide networking equipment for
establishing SWAN Advanced Technology Center of Excellence in state government
headquarters for demonstration of technologies. On the e-governance front, focus
is also on providing networking equipment for up to 100 villages for which CSC
can serve as models for further expansion. Both these activities will help Cisco
in the long run.

Next Gen Networks: Having tested its success on the private service
provider front, the company had a strong desire to enter the incumbent space.
During his visit, Cisco announced partnership with BSNL for establishing Asia
Pacific's first IP Next Generation Network lab in Chennai thereby helping BSNL
to do a test set up before it leapfrogs to NGN technology.

Having done well in last ten years, the company is now looking at scaling new
heights through collaborative/partnership model, and John Chambers has played a
master stroke through its India investment plans.

Pravin Prashant