“Multiservice Networks Will Be the Means of Businesscom”

Gary Daichendt (43074 bytes)

Cisco has emerged as the leader
among the vendors of networking products. Having maintained its commanding position in the
internetworking segment, the company, often synonymous with routers, has, of late,
strengthened its focus on other networking products like switches.

The convergence of voice and
data is throwing open more opportunities to the company as the networks will be carrying
multiservices in the future.
Gary Daichendt, vice-president, International operations, Cisco, speaks
about the positioning, strategies, and challenges of his company.


The convergence of voice and data is today emerging
as a major trend. What do you make of it?

Cisco views the convergence of data, voice, and video as the most
significant trend in networking over the next decade. We believe that "multiservice
networks" (e.g., those capable of carrying all types of data, voice, and video
traffic on a single network) will be the primary means of business communication in the
coming years. Corporate customers and service-providers will receive important benefits
from multiservice networks including reduced operating costs, lower total cost of
ownership, high-performance networks, more flexibility, new applications, and services.

How is Cisco positioned to adapt to this scenario?

Cisco is well-positioned from several perspectives. First, we started
working on data-voice-video integration well before it became popular, and this has given
us an important head-start. We have been developing technologies, introducing products,
and listening to customer requirements ahead of our competitors. Second, we have
demonstrated an ability to identify new market opportunities and act quickly to take a
leadership position in them. Data-voice-video integration is a market that many
competitors will target, and Cisco has always shown an ability to compete in dynamic new

Third, our expertise in acquiring and integrating companies with
advanced technologies gives us the ability to move quickly in developing solutions for
this emerging opportunity and bringing those solutions to the market.

Finally, as the pioneer of Internet and IP networking
infrastructures—and a leader in ATM, Frame Relay, traffic management and
Quality-of-Service (QoS) issues—we are uniquely capable of building intelligent
multiservice networks. Today’s "data networking technologies" will be the
platform for transport of voice, data, and video in the future. And, our company is a
leading provider of these technologies.

Cisco has been driving the market in this area—both from the corporate and carrier
side. Your acquisition of StrataCom is a case in point. What is your strategy for early
success in this area?

We have a five-phase strategy for enabling integrated multiservice
networking and are already delivering on the first three phases of it. At the highest
level, our strategy will be to target new market opportunities—such as companies or
telecom carriers who want to build new multiservice networks—and eventually pull
along "old" markets like the opportunity to upgrade existing voice networks.

The five-phase strategy of product and technology enhancement is based
on industry standards and open Application Programming Interfaces (APIs). The strategy
begins with two phases of Wide Area Network (WAN) integration, then adds gateways between
WANs and Local Area Networks (LANs). Later, there is integration of campus or Metropolitan
Area Networks (MANs), and finally the addition of policy-based, end-to-end call

Cisco’s open multiservice architecture for data-voice-video
integration uses only standards-based implementations, wherever they are available; or
proposed industry standards in areas where a standard has not yet been adopted.

When do you expect to see a strong product portfolio in the area of convergence?

We already have strong product offerings in the area of voice-data
integration, and are adding to it monthly. For instance, the following Cisco products
already have integrated voice-data functionality. MC3800 and MC3810 multiservice access
concentrators, Cisco IGK WAN switch, Cisco 3600 access router, and LS1010 campus ATM

In addition to these products, Cisco’s data-voice-video strategy
is evident in our acquisitions (for e.g., StrataCom, Skystone, Ardent, NetSpeed, and
LightSpeed); and in our alliances and strategic partnerships (e.g., US West, GET, Alcatel,
NEC, and HP). Furthermore, Cisco is active in emerging technology areas such as xDSL and
cable where capabilities will include voice over IP.

How Cisco play in the carrier market, i.e. the telcos market?

Cisco currently does business with virtually all major telecom carriers
in the world in one or more of the three ways—they use our products in their internal
networks; they deploy our products in their service infrastructures to offer data
services; and they resell our products (customer premise equipment) as part of bundled
solutions for end customers.

"The five-phase strategy of product and technology
enhancement is based on industry standards and open APIs."

In addition, we have ongoing discussions with a large number of major
carriers who want to collaborate with us on designing and building next-generation
multiservice networks. And our new Cisco-powered network program—which recognizes
service providers who offer advanced data services on networks built primarily with Cisco
solutions— has grown to almost 50 participants in less than a year.Gary Daichendt (25646 bytes)

What is your business composition today—data specific and voice-telco specific?
And how do you see the mix five years from now?

Cisco today sells no voice-only products. We have no intention of
competing against well-established companies serving slow-growth legacy markets. In one
form or other, all of our business is either data-only or integrated data-voice. In this
fast-changing market, it is impossible to make predications of how things will look like
five years from now. We are confident that integrated multiservice networking products
will make up a significant portion of our business. The exact percentage will largely
depend on the rate that customers adopt and implement multiservice networking strategies,
and of course on Cisco’s ability to execute its own strategies and plans.

What are the challenges for Cisco? More specifically, what are the
bottlenecks in this area?

Our challenges in this market fall into three general categories.
First, we have to develop a level of expertise in voice to match our world-class knowledge
of data networking. Second, we have to deliver on expectations of carrier-class network
reliability that customers have come to expect from voice networks. Finally, we must
effectively communicate that companies who are much larger and have more headcount than we
do actually operate with legacy expense disadvantages. That is, their ability to move
quickly into new markets and be cost-competitive may be impeded by their legacy culture
and size.

All that said, we feel very good about our prospects in the market for
integrated networking. We have made a strong start, are devoting excellent resources to
the effort, and are receiving positive encouragement from current and potential customers.
It is going to be an exciting market.

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