Cisco president and chief executive John Chambers told customers attending its Networkers conference in Denmark today that he has turned from industry pessimist to optimist, as he begins to see signs of a recovery in the technology sector.
In a speech dubbed "back to basics", Chambers maintained that the most fundamental change is about to occur as companies embrace the networked virtual organisation.
Where businesses had spent years developing decentralised models, web-based applications would see a move back to central control and common architectures.
Systems need to work together, he told the audience in Copenhagen, otherwise organisations will not experience any productivity gain.
However, Chambers warned that, in the move back towards a centralised model, past mistakes could not be repeated.
"Distributed architectures occurred because the central IT group was an IT tsar," he said. "So remote groups started doing IT themselves. We cannot make the mistakes of the past."
On a day when the company announced its latest acquisition, adding little known security company Psionic Software to its portfolio in a $12m deal, Chambers explained that Cisco had identified nine markets of "potential".
He said that he expected to do well in at least six, and would be disappointed if he succeeded in just four.
Chambers pointed out that some 70 per cent of Cisco's products were internally developed, but said that the company is not afraid to "use acquisitions to move into new markets".
"Our acquisitions haven't been perfect, but we have done pretty well with them," he added.
Chambers admitted that Cisco has suffered from the downturn, but insisted that quick action had minimised the damage.
"We got knocked on our tail very hard and very painfully," he said. "We decided that it was a 100-year flood, and would be deep. We made cuts and prepared for the upturn."
Cisco's market capitalisation, he claimed, is now $77bn, compared with a combined capitalisation of $17bn among its 11 main competitors. Eighteen months ago, capitalisation between the two was much closer.
"Now what we see is back to the basics focused on productivity and cash flow," said Chambers.
He predicted that productivity increases would be between three and five per cent. "As business prospects improve we will see a quicker upturn in the industry," he claimed.
Of Cisco's strategy, Chambers promised the audience that it was "100 per cent" customer driven. "Every time we get away from this we get into trouble," he said.
The company will continue to closely monitor market transitions, be they economic, products or buying habits. And it wants to grow 10 per cent faster than the market as a whole.
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