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Cisco stakes out 30 markets for IP world domination

Zettabytes of cash to play with

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Analysis In 2003, Cisco selected six key emerging markets on which to focus to drive growth and new revenue streams. Recently, it has increased that number to a huge 30, all unified by the common theme that they are driven by the explosion of data traffic over wired and wireless IP networks.

Cisco’s new markets

Last week Cisco CEO John Chambers told BusinessWeek the company is using its $33bn cash mountain to “move with a speed nobody has ever attempted”.

Although the core business of IP infrastructure, particularly routers, remains the heart of the business – and strengthened by the move towards what Cisco calls the - zettabyte era of massive data and multimedia traffic – it has been working on the original six new directions (wireless, optical, home networking, storage networking, IP telephony, and security).

Wireless activities have included consolidation of its market lead in consumer and enterprise Wi-Fi; an intensified focus on selling IP core networks to 3G, 4G and converged carriers; moves into mobile broadband infrastructure through metro network and WiMAX projects; and even a possible shift towards a wider range of wireless IP end user devices, possibly including smartphones.

And behind all this, Cisco has moved into blade servers and storage to support two trends that will be important for boosting usage of the IP networks that are its lifeblood – and that will be key to mobile and converged operators too.

These are cloud services, where users' data and applications are held in huge central servers, possibly run by operators, and accessed securely over the internet; and the rise of machine-to-machine and “smart grid” applications, using IP and broadband-class connections rather than the traditional low speed, low power M2M systems.

US public utilities are leading the drive for smart grids and sparking a more general bubble of interest in M2M potential, as a way to increase efficiency in many industries, and to create a new revenue stream for carriers over whose wireless networks all that data could travel.

Chambers says smart grid could be a bigger market than the internet, whose infrastructure Cisco dominates, and could be worth $100bn in the medium term. The company outlined its strategy for the electricity grid, initially in the US, this week, covering routers to grid substations to home energy controllers, as the utilities look for a digital, IP-based upgrade with capabilities such as smart metering. Cisco estimates that the communications portion of that build-out will be worth $20bn a year over the next five years. Mobile operators are hoping for a substantial business too, in managing services for utilities and running smart grid apps on their networks.

Entertainment operating system

This is just one aspect of the new 30-point plan at Cisco. It is adding everything from video surveillance to home media systems to digital billboards – just about anything that can hang off an IP data pipe, and that preferably also incorporates one or more Cisco devices (putting videoconferencing in the Scientific Atlanta set-tops for instance).

"No other company touches the content, the carrier, and the consumer—and the best part is they all drive each other," BusinessWeek quotes Padmasree Warrior, Cisco's CTO.

Hosted services will be vital too – as well as enterprise and consumer cloud apps, Cisco is tapping into key trends like social networking, and in January pushed forward its vision of an integrated wireless internet/media solution for the home sector, with the launch of a hosted social networking platform based on its Eos (Entertainment Operating System).

This is typical of the type of integrated offering Cisco aims to create within its new business streams, and all tied into its IP networks. The social networks platform is designed to enable media and content companies to create and manage online communities via all kinds of devices from TVs to PCs to cellphones, harnessing the growing use of these services to promote their brands and drive usage of their services.

Eos promises a simple interface for content providers to build and personalize web sites, and technology to allow them to support interactive web services, so that fans can connect with musicians, television shows and games. It also promises to reduce piracy. It is the first major fruit of Cisco‘s Media Solutions business unit, created two years ago to push Cisco‘s cause in the digital media content sector.

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