Cisco CEO Chambers: 'I did not want to compete against IBM and HP'

"No sense" in giving HP product plans

What is it about the data center that Cisco gets that you think these other big companies don't get?

It isn't a question of 'gets'. It's all about virtualization in the cloud and the role the network plays in it. We think the network is the central piece. It's not the data center or the end user device. It's any device to any content wherever it is in the world over any combination of networks wired or wireless to the home, to an Apple device, to a Microsoft device, to an IBM device, HP. Doesn't matter to us.

Secondly, it is not going to be about voice or data. It's going to be about video. Now, you can say that's a big stretch. But, remember again, we said before it would be all-in-one data, voice, video. [We] made that decision a decade-and a half ago and we began building them to architecturally work together.

So, is it a stretch? Perhaps. But we've done this multiple times before. We do it through innovation. We can acquire companies. How good are the large companies at acquiring companies? How many times have they acquired a company, kept the top leaders, kept the top engineers, brought out the next generation product and gained market share? The answer is: not very often. We've done 137 acquisitions. The vast majority of them have exceeded what we told our board we would do. This is innovation. This is our game. It's about market transformation. It's about being customer driven. And, I learned that the hard way at IBM and Wang. I don't fall in love with technology. Most every move we make, including this virtualization focus, was driven by customers. It was the customers' grasping what we needed to do. Then, it's usually internal innovation or an acquisition that kick starts you into it. Much like buying three switch companies kick started us into switching, which is now 40% plus of our revenue.

You said you would have preferred to partner on this data center initiative, but isn't one natural consequence of wanting to be the No.1 IT company that you have to burn some bridges? There certainly is the perception that that is happening now. Is there a risk of Cisco becoming isolated?

I think to look at the models that have tried to go it alone, that's a fair question. But Cisco is a partnering culture - we've been rated No.1 in terms of resellers and partners for almost a decade. Doesn't mean we're perfect, but we're pretty good. And secondly, you partner with the players that you have to [have] to win the long-term architecture. So, service providers align very tightly across the board. And it isn't just about selling routers and switches to them. Or doing technology. If you talk to [AT&T CEO] Randall Stephenson, I'd be surprised if he didn't say we were his best business partner too. Who would have thought?

Is that important to an enterprise CIO? The candid answer is that it's probably not as important now as I think it will be three, four, five years from now. But it's something they would not want to bet against because I think service providers will play a different role in terms of the enterprise CIO three to five years from now vs. where they are today. But I'm not asking the CIOs to commit. We'll provide that capability. We'll take the lead. We'll partner with the players like AT&T or Verizon. And then if their role expands as I expect, we're right. If it doesn't, we've got the customers covered on it. Our ability to catch a market transition has been very good. It's a new generation of players. Who would have thought that Intel would be a strategic partner for me like they are today? Or EMC or VMware? Or Net App?

You probably wouldn't have thought that our key services partners would be Accenture, Wipro [Technologies], Infosys, Tata Consulting. Yet if you watch who the new movers and shakers are in this industry, it's them. If you're going to compete on services, I don't want to be a body shop and have to compete against all those players. I'd much rather do the project management and use our partners to implement, because I couldn't staff it even if I could afford it.

We didn't burn bridges. Instead we formed new partnerships. I never burned the bridge. Is the bridge still there at IBM? Absolutely.

You burned one recently with HP.

Question of who burned the bridge. Very simply, there's a point in time where you've got to be realistic about what's going on in the market. Your customers see it. Your partners see it.

When we [decided not to renew our systems integrator contract with] HP, my customers were pretty much unanimous saying it was about time. You can't be giving your partner your product plans, your directions, your evolution and then compete.

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