Flash back four years, and one of the emerging stories leading into the company’s conference the last time it was here in Boston was the breakdown of the once-strong partnership between Cisco and HP in the face of HP’s growing networking business and Cisco’s then-nascent aspirations in the x86 server market. The press was hot for the story, but when asked about the burgeoning rivalry, Chambers smiled, issued a quick nicety about how exciting it was to have a competitor of the size and scale of HP, and then quickly handed the floor over to sales chief Rob Lloyd, who spent a good amount of time verbally eviscerating his Palo Alto-based rival.
Fast forward to the present day, and Chambers isn’t shying away from addressing competitors – past, present, and future – directly. Rather, he’s calling his partner base to arms to take up the quarrel with the foe. Flanked by a slide showing the number of Cisco competitors over the years that are now either defunct or barely clinging to existence much less relevance, Chambers urged partners to help him deliver the message to the market that “if you compete against Cisco and the ecosystem, you lose.”
“History is littered with those who’ve learned that lesson,” Chambers told partners.
He makes a good case, taking particular umbrage with those who challenged his company’s ability to enter the VOIP market (“They said we didn’t know how to spell telephony, and now we have 65 percent of the market.”) and the x86 servers market (“We’re the number-two player in x86 blades and growing at 70 percent.”, “We are on fire in the data center, and we are kicking every competitor’s tail in this space.”)
It’s a new tone from Cisco coming from the top. Chambers told partners to expect the networking giant to get more aggressive around competitors, particularly in situation where he feels the press and other pundits are quickly to challenge the company and trumpet its rivals as the next Cisco-killers. And it’s a message where he wants the company’s channel to amplify the volume. To put it political or PR speak, Cisco clearly wants to be ahead of the message. Asked about the new tone, Chambers said the company will be “more direct” with challengers, and his only regret in that regard is that it didn’t start doing so earlier.
“We should have been more direct in talking about our SDN story more directly,” he said, lamenting his feeling that Cisco may have allowed his rivals to frame the conversation
But the direct addressing of the company’s rivals is just one aspect of the more aggressive tone for Cisco. At Partner Summit, Chambers for the first publicly proclaimed the company’s desire to be “the number one company in both communications and IT.”
It’s a big goal that has been the part of the company’s aspirations for almost two decades, Chambers said. But he feels now’s the time to go public with the goal for a number of reasons.
The way Chambers expresses it, he sees the difference being the company’s decision years ago to define and go-to-market around broad, interconnected “architectural plays,” whereas his rivals have chosen their silos. That combined with the recognition of what he describes as the recognition of the company’s network-centric message from governments and enterprises around the world afford the company what Chambers describes as a “windows of opportunity” to grow both in terms of business and market leadership.
We’re clearly going for it,” he said, clarifying that his view is to be “the number one IT company in the eyes of our customers.”
Of course, those customer eyes aren’t limited to existing Cisco customers, but rather to any and all potential Cisco customers.
The company is also making the statement because it needs its partners to be aware of and on-board with the move.
“When you start to move, you have to outline to partners and customers what you’re going to do, and then you have to make the move,” he said. Consider the message sent – Chambers referred to the company’s goal to take the “number one IT company” crown no fewer than five times during his Partner Summit keynote.
The volatile nature of the market is another reason to make the public proclamation now, and Chambers said he expects “brutal consolidation in networking first, and the in overall IT,” using a slide showing the declining stock performance of many of his competitors over the last year to hammer his point home.
“Of the top six IT companies today, I believe that at least three of them will not be here five years from now,” Chambers posited.
So why will Cisco survive this bloodbath he sees coming, which he predicts will be “much more a game of musical chairs than a tide that rises all boats”? It all goes back to one of Chambers’ favorite stated strengths for his company: its ability to recognize and jump on market transitions early.
Cisco, he says, “has never lost a major battle in our major areas of core competency,” although he will cede that it now-forgotten home strategy was a major failure. (Though he says he personally takes responsibility for that failure, saying most aspects of the strategy were right, but needed to be more focused on the cloud and mobile devices than it initially was.) Winning those battles, Chambers says, is the company’s biggest differentiator, and it’s a high-impact segment.
“You miss one transition if you’re a single-product company, and you’re history,” Chambers told partners. “You miss two transitions in ten years, and no matter how big you are, you’re history.”