Cisco CEO: Video to Drive Market Expansion, Acquisitions Likely

Cisco (NASDAQ:CSCO) CEO John Chambers hinted that his company may be on the hunt for more acquisitions, saying that Cisco already has entered 30 adjacent markets to its core networking infrastructure market, and plans to be in 50 adjacent markets within 18 months.

“The next generation of communications is about video,” Chambers said. “It’s about a connected life experience.”

Chambers said that the way to enter new markets is through acquisitions, like Cisco’s purchase of Linksys a few years back, and its recent buy of the company behind the consumer Flip video camera. Chambers made the statements during his keynote address at the Cisco Partner Summit in Boston today, which focused on the opportunities for Cisco and its solution provider channel partners in the future, particularly around video and other collaboration technologies.

While Chambers conceded that the current economic environment was among the toughest times end customers have ever seen, Cisco has faced economic downturns again and again – and has gained market share in the process – by balancing innovation with discipline and process, according to Chambers.

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During the 2001 downturn Cisco cut 25 percent of expenses, Chambers said. “We had no choice but to take out headcount and salaries expenses,” he said. “This time is different.”

This time Cisco took out $1.5 billion in expenses without the big cuts to salaries and headcounts, and that’s what gave the company the capability to enter those 30 market adjacencies, he said.  Those adjacencies have included market expansions to emerging countries, Web 2.0 technologies, collaboration, unified communications and telepresence.  Others are smart grid, smart connected communities, virtual healthcare, safety and security, and consumer.

Video and collaboration will be the underlying infrastructure for these market adjacencies.

“Telepresence is the flagship,” Chambers said. “It allows customers to get what Web 2.0 is about. Behind that is a depth of opportunities to go rapidly in unique ways with Web 2.0 across entire companies.”

Chambers presided over a demonstration that used telepresence as the platform to demonstrate a series of other products from unified communications to a partner application to help nurses locate healthcare assets such as wheelchairs within a facility.

Within Cisco itself Chambers says the company conducts 4,700 telepresence meetings a week.  The company changed the format of its recent sales meeting to a virtual one. The meeting, which used to bring in 17,000 people and cost $4,307 per person now costs $437 per person.

“This is the greatest opportunity of our lifetime,” Chambers said, completely changing the way we do things.