CES 2014: Cisco's Chambers On Internet Of Everything, 2014 Challenges

Cisco's 'Inflection Point'

Cisco's big focus at this year's Consumer Electronics Show was around the Internet of Everything, or the emerging ability for everyday objects and devices to be connected to the Internet and to one another. For Cisco, it represents what CEO John Chambers described as an "inflection point" for Cisco and the IT industry at large, as well as the fourth, and most significant, phase of the Internet as we know it.

At the Cisco press conference Monday, Chambers talked to journalists about what the Internet of Everything phenomenon means for Cisco, its customers and its partners. Here's a look at what Chambers had to say.

What major challenges will Cisco face in 2014?

The major challenge I think for us, and for the industry at whole, is about what you are seeing here at CES. The Internet of things is the next major market transition, and it is about connectivity. ... What you are going to see is this transform every aspect of the user experience, for entertainment, for business, for health care, etc.

So what I will focus on in my keynote tomorrow is how we think this will dwarf what has occurred in the first 30 years of the Internet from 1984 when our company was founded with 1,000 attachments to the Internet, and think about where this is going to go. But what people are really missing is [that it's] about how you use this data ... [and get] it to the right person, at the right time, in the format that they want, and in a format that they can make decisions off of. ... I think it's the ability to be able to think out-of-box about how this will transform all of IT.

What's the opportunity for partners in Cisco's Internet of Everything offensive?

As you know from your experience and your most recent rating of Cisco that we are No. 1 in every channel evaluation done. In your most recent example of the Top 100 [Executives of 2013], we were the No. 1 in terms of CEO, ... we were the No. 1 in terms of sales leaderships, and we were No. 4 in terms of disruptors.

So our partners have to transform their businesses, just like we do, to go where the income is going to come from, and to be able to do that faster. The nice thing is, when you talk about the [14.4 trillion Internet of Everything opportunity], it means there's a huge opportunity for everyone.

I think our channel strategy plays right into our sweet spot. And, you will see us stay very committed to our channel and partners. We are the No. 1 player there, ... and I have no intention of ever losing that. As a side note, that was the first decision ever made when I became CEO at Cisco, in terms of making us a channel company.

How will the Internet of Everything change the face of Cisco as a company?

If you watch, what the Internet of Everything will do ... will be the equivalent of what occurred a decade and a half ago with e-commerce and Cisco. It was e-commerce that suddenly put us on the stage on a global basis and that brought the Internet and the power of technology to a practical end use. The last decade we have done very well with data, voice video coming together over the Internet as a common fabric. This will be bigger than all of those combined, if we do it right. I would say, using my numbers, it's five to 10 [times] what has been done to the Internet over the past 30 years, in terms of the opportunity for the next decade.

So for Cisco, [it's about] our ability to lead not just in thought leadership, [but] our ability to say how this changes the everyday life of people around the world, and how do you take all these concepts together and realize this can completely transform [not only] our company but also our ability to go to market with others. It will require a new form of IT.

Cisco isn't always the first company to come to mind with the Internet of Everything. Talk about your challenge there.

I think most people, when they think about Cisco, would say "you guys are the clear thought leader on [the Internet of Everything]. You've been on this for over seven years."

And the point that I would now make is that we think this is the year of the inflection point. 2014 will be the inflection point for this industry, and this is where you will really see this market, in my opinion, take off and become really relevant.

What's your M&A strategy for 2014?

Anything I say today should not have any bearing on what I'm about to do or what's going on in this quarter, etc.

Our M&A strategy continues to be a very important ingredient of our build, buy and partner [strategy]. Acquisitions have been a key part of our success, and we often use acquisitions to move into new markets. We did that clearly with Sourcefire, ... and now you watch what's the hottest industry [trend] going on? It's security.

In certain areas, like collaboration, our M&A strategy is more [targeted] at small groups that bring a particular expertise in user interface, or a particular expertise in mobility or application software.

So M&A, you will see it continue to be an integral part of our overall strategy.