Asia-Pacific important region for Cisco

Cisco's Partner Summit 2006 kicked off in mid-March when president and CEO John Chambers took the stage, right after a thunderous performance by a drum-troupe jarred the Asia-Pacific press corps from its collective jetlag.

The drummers weren't really needed. A Chambers keynote never fails to cover a blistering range of future technologies, shaking up the assemblage with visions of possible business futures.

"The network will converge, and will also become the platform," said Chambers, "and that's how we will deliver applications and services to our customers."

"Change makes a CEO uncomfortable but [IT] is an industry where you must change," he declared, "It's like a chess game: how do you protect your major pieces?"

"The way we generated profits two years ago will not generate them two years from now," said the Cisco chief. "You have to move 3-5 years in the future." Chambers also said that because Moore's Law dictated that price-performance doubles every 18 months, he feels that puts the onus on IT firms to sell twice as much equipment just to stay in place.

Chambers said that his firm plans to move into unified communications, leveraging both the converged networks that are a Cisco strength and the recent acquisition of set-top box manufacturer Scientific-Atlanta. He described unified communication as "allowing your customer base to communicate in means they're most comfortable with," meaning video, voice or text.

Chambers added that he saw US CEOs more confident in the global economy, making new hires as well as capital expenditures. He said that any emerging market strategy should not include India/China, because "those markets should have been figured out 3/5/7 years ago."

Cisco's A-Pac strategy

Asia Pacific President Owen Chan said that Cisco experienced growth in the mid-20-percent area for 1Q 2006, "with strong momentum going into the rest of the year." Chan said that the A-Pac market represented 12 percent of global biz, with China seeing 20 percent growth and India growing at 30 percent.

Chan added that Cisco A-Pac was introducing lifecycle services and, echoing the conference's overall theme, said the emphasis was on a shift "from volume to value."

David Rubio, VP, Asia Pacific, addressed the recent shift in Cisco's A-Pac structure that saw Hong Kong integrated with overall China operations in January 2006.

"Hong Kong was always part of North Asia [operations]," he explained, "while Japan always a different part of our operations." The main reason for the change, said Rubio, is the strengthening of links between Hong Kong and the mainland. "The south of China is becoming a technology corridor, and many of our partners now cover both HK and China," he added. "We anticipate growth, and our partners see the same business logic."

The A-Pac VP said that mainland businesses "see Cisco as both a tech provider and [an operation with] a well run business perspective, and they want to evolve." He added that one of Cisco's strengths is covering market verticals, while another is service providers. "It's like: 1+1=3," said Rubio. "Get that business model spinning." He added that deregulation in financials and telcos were a factor affecting these markets.

According to Rubio, Cisco has R&D operations in Shanghai's Pudong district as well as Beijing, and plans to ramp up R&D "quite significantly."

"How do customers view networking: as a cost, or as an investment?" Rubio said that, globally, CEOs now see an enterprise network as an investment rather than a cost, but parts of Asia have yet to be impacted by this global trend, so they still see it as a cost. "In some places," he said, "the CIO still reports to CFO...we must change this mindset."

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