Cisco CEO John Chambers promises to streamline

In the months leading up to Cisco Live, the company struggled with stocks trading at an all-time low, massive layoffs pending and a loss in share of the Ethernet switching market. So when CEO John Chambers took the stage at Cisco Live 2011, he had the task of convincing users that he could turn things around. His message to them? Streamline, streamline, streamline.

Key among Chambers' promises was that he would bring the company back to its core competency technologies and better focus priorities.

Specifically, Chambers said the company would focus on five core objectives:

  • Switching and routing, coupled with security and mobility.

  • Video

  • Collaboration

  • Data center

  • Business Architecture

Read the full transcript from this video below:  

Cisco CEO John Chambers promises to streamline

John Chambers: We will be driven by our customers and we will be the best there is in the industry about innovation. We're going to talk about our progress in innovation today, but how we're going to streamline ourselves to be even faster in the future. Part of the reason that you saw the tremendous attendance increase, 32 % year-over-year for Cisco Live, is the role of the network is going to change dramatically in the future. Almost every key technology that we're going to talk about over the next several days will be enabled by intelligent networks. The ability, literally to change how you interface in a healthcare environment, in an education environment, to your customers, or to your employee base, with the new technologies are cloud, video, social media, etc. What that does is create an opportunity for us together, to dramatically deepen our relationships. Not only for you to provide where we need to go in terms of our product direction. But where we need to go, in terms of helping you achieve, using the network to achieve your business goals at a speed with low risk. The ability to do that as new technologies come on fast, and by the time a CEO asks you for something, and if you say, "Oh, heck, we have three years," the CEO is onto the next business.

We're also going to simplify operations. And while we were very good at innovation, we'll talk about our innovation engines. We were too complex, and that builds up over a period of time. So you're going to see us make those changes both in engineering and sales, which will allow us to use innovation even at a faster pace. I spent three years at law school. I want to tell you, it was very valuable. One of the things I learned how to do is to say, "forward-looking statements are protected by any confidence I make today." So if I'm in a very good mood it's because I'm with friends. If I look tired at all, I have no idea why I'm tired, so pay no attention to that in terms of any comments about how the quarter look or anything else. But we will be making forward-looking projections. I always believe in starting with the basics. Why did 15,000 come here? It's because of the ability over the years, for Cisco to be your partner, to be able to do whatever it takes to make you successful. We're far from perfect, but 11 of 17 product families, we're number one in. And the ability to tie those together and to listen to your input on where we need to go is what Cisco does better than anyone else. We also are a partnering organization, we have 220 partners here. It's our ability to combine our products, with our own people, with our partners, in bringing together the portfolio for you, is one of our key differentiators.

We find more and more of the people in the networking moving from loyalists to evangelists. How many of you would classify yourselves in terms of Cisco evangelists? It speaks to the power of what we can do together to change in your environment, your business goals, your ability to compete on a global basis. When I talk with each one of you, when I said, "What is the number one reason you're here?" When we poll you, the number one reason was for training and learning. Because this industry is moving so fast, keeping up with it is a constant challenge. The second is, "What are the key industry trends?" What is new, what is becoming mainline, what perhaps is moving out? The ability to think about how that applies to innovation, because the way that you innovate, and the reason you see such excitement, every government leader that I've talked to around the world, every CEO I've talked to around the world, one of the top two things they want to talk about is what? Innovation. But how you innovate is through technology. And I would argue that intelligent networks will become the most strategic asset in the IT capability. And I'll share with you some of the reasons I believe that so strongly.

There are also areas that are moving very rapidly. When we took polls before, when we talk about security, security was probably number three or four, always important, but never making the top of the list. How many of you, security/privacy is your number one issue? Quite a change, isn't it? How are you going to protect your data center, your network, your device? You can't without architecture. It's one where today, even though we're one of the clear leaders in security, we're only staying one or two steps ahead of the bad guys. So the ability to talk about why the network has to be the foundation for that, we will focus in on today. And Brett Galloway will spend a lot of time on his borderless networks town hall meeting, talking about that as well. Data center and virtualization. How many of you thought when we said publicly that we're going to enter the data center two years ago, how many of you thought we'd be successful? Well, you were the minority, but I thank you for your confidence! And yet it shows our ability to enter this new market, and today have 10% on a global basis of the X-386 marketplace, in terms of legs, and 18 % in the U.S., the number three player. The ability to capture new markets not with technology, but say, how do you apply them to the cost benefits I'll talk about later. Collaboration is in the forefront, because most leaders understand collaboration will drive productivity, and will drive competitiveness, and the way you interface to your customers differently.

The cloud strategy, it is the next IT architecture, and we'll spend a fair amount of time on that. Mobility, as you saw earlier, is a given. So mobility and security spans across all areas that we'll talk about. And the tremendous expansion and proliferation of devices is a challenge for us all. What we will try to do over the next three days, is to share with you very crisply our vision, our strategy, and our direction on each of these opportunities and challenges. What's on my mind? Listening to you. I mentioned that already I've talked to probably a couple hundred of you individually. But over the next three days I'm asking for each of our Cisco leaders to spend time with you. Whether it's you joining somebody at a table to sketch out what they're doing on the architecture of a product, or going into that town hall meeting for a healthy give-and-take in terms of your direction. Second is how do we drive your innovation? How do we align our key corporate priorities, which I think will drive the future of the networking,, with what you want to do in your organization regardless of which industry you're in? And how do you leverage the network to do that? How do we catch together these transitions that are occurring in product, in technology, and in business models, and really build an architecture that future-proofs your ability to move into those quickly. And gives you the flexibility to do it in any aspect, whether it's in terms of multimedia, or security, or business models?

And what you'll also see is how we're restructuring Cisco, to drive the very basic premise. You ask, we deliver. And while they're many aspects of Cisco I think we do a very good job on, there are a number that we must improve on. We'll talk about those very candidly as well. Our goal is, when you leave you'll walk away saying: "I really not only enjoyed once again Cisco Live, but I understand clearly the technology strategy of the company," and how that fits into your view of where the industry change is going go. "I understand the continued differentiation that Cisco brings, and why that is such a unique value to us." And the network, how it's going to enable you to do your job better. What do you value at Cisco? When I ask people, it's always, "The products come first," the number one and number two product areas. Then it was what we said on "People, partners and the integration." But it's the third area that's the one that's starting to be the hottest one to discuss, which is innovation. How do you combine these products, and the architecture together, to achieve business goals? And how do you do that in a way that future-proofs where you're going as much as that's possible, to lower the risk involved, and to enable you to make these moves with speed and scale.

Finally, we will do whatever it takes to make you successful. How many of you have had a critical account, at Cisco in your history? How many of them resolved successfully? Did it go to our relationship? Did it get closer? It really did. We'll be there for you in a way that no other company in the world is, when problems occur. To achieve. There are areas, however, we must do better in, and we will talk about those. We've got to be easier to do business with. Contract negotiations are painful, aren't they? We've got to think about how you drive our product direction more effectively, where we focus you to which group you really have the influence on. We need to do a better job of sharing our road maps of where we're going, so that customers can put in place what they want to do to match that. And the key theme is, as we build out architectures, which I'll show you later, most of you in this room really believes it's the future. They've got to be easy to use and simple, and they've got to be open to any device participating in that. I think what you'll see from Cisco is that ability to do that.

But innovation is the buzzword of where we're going to go. The mobility, the stress on productivity of doing more with less, which all of us face. New competitors, some that we never anticipated, the role of social networking, change and innovation in many people's minds. The vast proliferation of broadband. Just last month we found Brazil stated that within three years they'd have broadband at least of 1mg capability to 70 % of the population. What it says is government leaders, regardless of where they are in the world, understand that the way you change the lives of your citizens, from a services point-of-view, from an education, from a job creation, is building out this new infrastructure. And you will see the economies move from what we used to define as an information economy, into a network economy. And think about what I just said. In the information economy it's about getting access to data. In the network economy, it's about getting access to experts. The number one productivity improver, when I talk to our customers across the board, is, how do you bring your experts to your customers? Whether that expert is a doctor, a nurse, a key engineer, etc. The second thing is, it's moving from individuals in the information economy, to communities. And that means you've got to structure everything you do, from your social networking capability, to your collaboration, to your models, to enable these communities to work more effectively together. It's no longer a static environment, it's very dynamic. It is one that is not going to be driven as much by creating controls, but more by collaboration and teamwork. The network enables that. And to keep up with where you want to go, we've got to have a constant stream of innovation. In the last six months, 85 new products announced. We go in with the mentality of number one or number two in a marketplace, or we don't stay in a marketplace. And we won't bat a thousand, no one else does, whether it's in terms of new markets we move into, or acquisitions we make, but we have the best batting average in the industry.

We have the ability to acquire companies to fill product gaps, and then keep those companies part of our long-terms strategy. So when you think about innovation, it will stay on "built by a partner" very aggressively, but we will rightfully put on board our Top Five company priorities. These Top Five priorities, I think, will drive the future of networking. And when you think about each one of them, they will strategically leverage the intelligence in the network to achieve the goals. At the heart of the future are the network, are routing and switching, and you actually see many of the functions blend together. The ability to do that with services, is really the base on which we're going to build. The ability to move from a billion phone calls out of a router, to a billion videos. The ability to have any device go across any combination of networks, to any content in any media form that you want. That is what the work will do. Collaboration will be the driver of productivity, so you're going to see us put a huge emphasis on collaboration. It's the one that I think, candidly, will probably drive productivity of lower-end companies in 5-10 % per year. And the business executives get it.

Data center virtualization. Cloud, it is the next IT architecture. By the way, it's also the most network-centric architecture ever. Video and I'm going to go out on a limb, four years ago we said video was going to be the next voice. And everybody said, "Yeah, I kind of get that." Video four years from now will not only be the leading way we communicate, it will be the primary form of IT. Think about what I just said, and think about the implications architecture, if you believe that. Architectures are the way we tie products together, so that they work seamlessly to the best of our capability, in terms of ease of use and openness. And the keys words of "ease of use" and "openness," you'll see all the architectures we build will be on open standard, allowing every one of those mobile devices, doesn't matter if it's from RIM, Apple, Microsoft OS, whatever, to be able to effectively participate. Now, Cisco devices will be able to participate a little bit more effectively than our peers, obviously. But it will be an open standard in terms of where we go. So this is the base on which we believe the future of networking will be directed.

As you talk about that, let's start with where we are in routing. For the last 11 years when we first started out we were clearly the leaders in routing, because we killed all the players there. But for the last 11 years there was always one element of routing that we were really missing on, versus our peers. It was either an element at the core, or at the very high end of the core, or as element at the edge, either fixed or from a mobile point of view, or an element of access. When you look at where our products are today, I can look at you right in the eye and say, "For the first time across the board, in terms of our routing portfolio, we have the best there is in the industry. We tie them together very uniquely." ,The CRS-3, a billion videos, if you will, the SR 9000, solving the edge problem. The ASR 5000, solving the mobility problem, the exposure we had before. In terms of switching, a very good product portfolio. And notice that on this chart, this is about market share in terms of the top, in terms of revenue, product share in terms of the orange line. But look at how we've reinvented ourselves in terms of the new product areas. So when you really look at our product share, it's really pretty stable. You look at our revenue share, we're going to get some really good, tough competitors, and you're going to see us do more in switching. You're going to see us bring switching, which I'll talk about later, into an architectural approach, where we would be not competing internally. But we had one group responsible for our switching direction, one group responsible for our operating system direction, and you know where I'm headed with that. If you do that, you can move faster, bring out products faster, much less cost for us, and it can mean a lot faster innovation for you.

In terms of services, this is something that Gary Moore, has done an amazing job over the last decade and a half. We're rated the number one services industry, in terms of customer satisfaction. And we do it in a way that aligns with your key goals to really make a difference. But we also do it with our partners were cognitively, using a ratio of one dollar for us per five dollars for our partners. If you look at the extra piece we bring to bare, it's not only our 11,800 people in our in-service industry, and our ability to do a huge amount of this work online, with 78 % solved online, with the ability to partner with partners who have 280,000 Cisco people. And out of that, 84,000 are certified partner employees. Now, the challenge I gave the partnering community just three years ago, was that your customer satisfaction was not as good as support from Cisco. And I want to congratulate the partner community, tremendous improvement here. A key take-away here is to look at the resources we bring to bear in this. Not captive resources like an IBM or an HP does. But resources of an ecosystem that allows us to meet your needs on a global basis. One that would not only help you build the network architectures for the future, the ability to build this with the flexibility you need, etc. But the ability to take your business solutions, and to do that in a much faster time frame than any other vendor. And you know clearly where I want to be, I want to be your strategic partner in can do in the world. And to do this with intelligent networks, not just dumb pipes, because the intelligence is where you really differentiate, to realize the full value. Architectures. When we first started talking about them, I didn't do a very good job explaining them, but it was so new in terms of a concept. Today, when we polled you ahead of time, 96 % of you felt that architectures and the key areas we were going we were "very important," "extremely important," or at a minimum, "importance." The vest majority, very important or extremely important. What we're realizing and this is your own data that you gave us coming into this session, the number one reason for architecture that makes it effective is, it increases the increases the reliability and if done right, and especially used right, it increases the security in terms of what can be done in that environment. We all understand the implications of cloud, and the implications of almost an unlimited number of mobile devices.

Secondly, with architectures, you know products have to be designed together to work effectively. It's impossible to do across vendors, and even within a company, it's hard to do. That's part of the reason we also restructured our collaboration groups and others, so that we have an ease of doing that across the board. But think about it. What is the number one feature that you want out of our collaboration architecture? It's nice to have social networking. It's really cool to have a telepresence, it's nice about Cius and how you bring in WebEx and ease of use. But you want openness, you want ease of use, and interoperability. So it's the ability to do that from an architecture, and that's the only way that you can do it. And as you do that, it's got to be very secure, and very manageable. It allows you, when your CEO or your government leader says, "I want to move, and I want to do this in healthcare, I want to change this." Since one individual said "in terms of healthcare to be delivered from a university, to move with the speed." So I've got to take three or four years before, if you already have an architecture in place, where all you have to do is provision the applications and make minor changes, in terms of where you go. It allows you also, when new technology trends occur, have you ever seen the new technology trends move faster than they are today? I have not. And think about cloud. Three years ago, Cisco and cloud were just getting started. And today, I would argue we are the leader in the enterprise, and the leader in the service provider/cloud partnerships.

The ability to do video. Give me one chance in three that video will be the primary form of networking. Would you all agree on that, in terms of communications? Quick show of hands? How many think that video will be the primary form of IT? I think that it will. How do you build an architecture that allows you to do that? That says that every device that you do must be video-enabled, have open standards, the ability to inter-operate, with proper security, fixed and local, across any combinations of networks? And you know where I'm headed. This is what our architectures do that is so different that what our peers do, that come out with one product at a time. It has huge cost savings with architectures, and candidly, over time, it will save us over time in terms of our dollars that we spend. Collaboration, as Sheila Jordan says, I just noticed her in the audience, she's one of our key spokespersons from our IT group on this, will drive productivity between 5%-10 % per year. Think about what's possible. Any time a CEO or government leaders sees telepresence. It doesn't matter whether it's the president of Mexico, or president of the United States or the president of Russia, or the prime minister of India, they grasp this is going to change things. They might not be able to articulate how.

And as you think about the ability to do this, the ability to do it already leading with the number one web conferencing capability, with WebEx. Where we have 20 million meetings per month, and the ability to build this collaboration off of what? IP telephony. How many of you have access to IP phones? Now, as your peers look around the room, realize that message. We went into a market that we didn't know, and we became the number one player by a third. And at the time we talked to you about those IP phones, I don't know if you remember, I said, "This isn't just a phone, this will be your data portal and your video portal over time." So when you look at where we're going, we're putting video into everything we do architecturally. And we're doing it in a way that not only provides a broad portfolio that will be designed to work more effectively together, and you'll see the changes I talk about later in engineering, allowing that to occur at even a faster pace. If you think about what it means, though, for open architecture and interoperability, and think about the key mega-trends that change the way we work. Think about what Cisco's going to do in each of these four mega- trends. The first is global, we all understand that. The second is social. Communities are here to stay. They are tremendously powerful, they will enable productivity. The third is visual, or video if you will, and the fourth is virtual. Name me one other player in the industry who really is able to bring an architecture capability to mobility, to enterprise social networking capability, to video, and to the virtual cloud capability, whether it's virtual desktop or the cloud. Then you begin to bring it together, and you begin to realize that collaboration isn't just a concept, but how it ties together from a product perspective.

The Cius. You're beginning to see a launch in volume. You never know when you launch a product, will it hit and exceed your expectations, although I believe this product is going to be really hot. But if you think about what is it that's so different, it is a capability, not just a business tablet, but the capability for a virtual desktop to be designed specifically for business. That will allow the collaboration to occur when you bring your telepresence sessions together, with your WebEx sessions together, with your capability to do your social networking, the quad, if you will. With Sias, you can bring this to any device that you want within the network. And we will also allow the interoperability of other devices. You begin to think about applications, often in Android Base, that is Cisco operation headquarters. You think about it as a VDM, a virtual desktop if you will. Where you can not only have all the advantages of a virtual desktop, but you have all the security and capability that goes with it. And if by mistake, you leave it behind, in your room in Las Vegas, the ability to wipe it clean.

As you would expect from a utilization, because many of us know that some of these devices get utilized in very unique ways, some of the unique war games, if you will, or online poker, etc., the CIO can actually determine which applications can be done within this environment. And from a security point of view, it's going from the beginning. In terms of the encryption, and the ability to maybe only get applications based on your presence and locations. So, what you see again is how we combine and really pull these concepts together. Todd Lammle, when he joined Cisco about three years ago, and the first thing I asked Todd, who's one of our two leaders in engineering, to do, I said "I think the cloud's going to be very important. I want you to figure out the strategy for us to do this, work with the engineering partners, and by the way, we've got to have it in place in two to three years." And what you saw is exactly what we did in that time period. The ability to move into a market, and because we're the disruptor, we see where perhaps the challenges of our peers are, in terms of their not moving as fast as people anticipated.

And when you think about a cloud, to me, it's fairly simple. A cloud, to me, is really a combination of software as a service, platform as a service, infrastructure as a service. And I'll always look at why customers want it. Number one reason why most customers want it, how scalable it is. Candidly, how efficient or cost-effective it is; and availability on demand. And so as we saw this occurring, you began to see us tie together our switching strategy in the data center with our storage strategy, with our networking strategy, with our processor strategy, with virtualization. And that's what allowed us to build clouds at a much lower cost of ownership, and much faster time to market than what our peers could. But catching those market transitions and having the courage to change is key. And now when you look at it, if you're an Enterprise customer we go straight into our portals, networks and architecture of how it fits right into. In terms of what we do on collaboration, how we do public and private clouds together. If you're a service provider, it gives you the capability to say, let's put it straight into our network architecture. And like a Verizon would say, everything is a service. Cisco could be your partner to help to bring that to your customers and your base. So, it will be the next IT architecture.

Think about it. What is unique to the cloud? Everything in the cloud is virtual. It is about intelligent networks. So if we do our job right across our five company priorities that we believe will drive the future of the networking industry, you can see how cloud fits very tightly to this. And I don't want to stray off from [Rebecca Jacobi's] discussion with Todd Lammle tomorrow, but the efficiencies you see on cloud are exactly correct. In our own environment when we were bare metal, it would basically take six to eight weeks to provision the issues, opportunities. As we moved to nearly virtualization, we had a 37 % improvement in total cost of ownership. As we moved to the first stages in UCS with the capability with [Nexus], we had another 27 % improvement. And as you move into the fourth stage, we think we'll get one more 27 % improvement. Reminds me of an industry we've seen once before. Why didn't the traditional players move here faster? The answer is that we sell a lot fewer servers, a lot fewer data centers. Very similar to why the traditional players in IP telephony. Great companies: Nortel, Alcatel, Lucent, Siemens, Ericsson, etc. didn't move quickly when IP telephony became the next architecture. Because they didn't know how to go to their install base to the future, or weren't willing to deal with the challenges that occur. We're going to lead, very simply, in the cloud, and we're going to be very, very aggressive. Video will be the next voice. We'll see if it's a jump too far, to say video will become not only the primary platform for communications, but the primary platform for IT. O.J. I think you would probably say that it will be, and it's a good thing, because you're heading up our efforts in this area, you and Mary. But it's the ability to realize that as video took off, and it's no longer about a PC world, it's about any device with open architectures. As you do this, you've got to have open standards. You got to also have a way of securing that across the board as you move forward. Thinking about where this occurs is a natural for Cisco.

51 % of all Internet traffic today is video, 91 % by 2014. We talked earlier about how I believe video will be the platform for the future. But without an architecture underneath that, you just have videos that you can't search to, you can't manage, you can't anticipate what communities of interest should move it to. And this is where MediaNet is so important. It is the architecture that goes underneath this, that takes those videos as you get it and transcodes it so you can cushion and search to competent areas of interest, as well as bring it from any device participating in your network. Without this architecture, video does not really take off. And as you watch Cisco's focus on this, I think you'll look back two, three years from now and say, "That was really the underpinning for pulling it all together." But when you look at where we are in terms of video, you look at the stacks of video we bring together. From telepresence, all the way down through the unified communications, all the way down to the Cius with mobility to any device, any smartphone, etc. within it. Who else in the industry has both the stack, the critical mass and the architecture? Two years ago, and still last year, there was a number of you who were fairly critical, and rightly so, of where we were on mobility. Mobility is an area that we have always had, and we had even faster, but local area networking and the edge of the network. With the acquisition of Starent, you begin to see us move very aggressively in terms of a total architecture for mobility, and one that I now believe is the best in the industry. What we think about mobility is how you combine the cloud with the network with the client. A lot more of that discussion to come in the future.

Security. This is my top focus in terms of a capability across all of those Top Five key company focus areas. Because when you talk to the ability to maintain differentiation in your products, ie., those margins. But you talk to the ability to provide proper security, you can't do it without a complete architectural approach to it. The ability to say how does this interface do with each router, each [aces], each software with open architecture, etc.. I strongly encourage you to go to Brett Galloway's discussion on borderless networks. Because what we're going to do to, what Brett is leading the charge for us, is an architectural approach to security. And I would argue as I discussed earlier it can only be done from a network intelligence-centric approach, to be really effective. But it's how you combine all of these, that we make Cisco different. The simple concept of any device over any combination of networks, in whatever format you want, managed and un-managed. Requires borderless networks coming together, service provider, IGN's coming together, our data center architecture, our collaboration architecture and our video architecture. And then what you do, is you get to that last point that we talked about in terms of our architectures, you're able to do when your government leader or your business leader says, "Here's what I want to do."

You're able to deliver to them the ability to bring that service to their customers if they're in a retail chain, to their patients if they're in the healthcare system, to their engineers if they're in an engineering system, to cut their innovation time in half. And so it's the ability to know talk about business architectures with key government and business leaders, and then tie to the product architectures. This is the primary transformation Cisco is now on. How do you do this together? But when you do it, it is unbelievably powerful, and I'll share with you some of our successes. But before we do this, I found that, well, if I'm fortunate, you'll remember two or three things that I talked about. You'll remember the demos. And so each year we try to take a demo that is kind of a generic demo that you grasp a lot of key concepts from, and tie together these various assets. This year I'm going to ask Jim Grubb, our Chief Demonstration Officer. Jim, I want to take the concepts our company's Top Five priorities, how that would drive the future of networking. I want it tied into where video plays and collaboration plays uniquely. And I want it to sizzle! How are you going to do that and what are you going to share with me?

Jim Grubb: All right, John. We'll attempt to do that in about 12 minutes here. What we're going to do is, we're going to look at some of the concepts that you've talked about. Some of these architectures working together in the oil and gas industry. So, if you'll join me back here.

John Chambers: Okay. So it isn't so important it's the oil and gas industry; the concepts are that this will apply to any industry with remote workers.

Jim Grubbs: That's right.

John Chambers: Any company that does innovation. Large engineering groups, the way they interface and bring their expertise to wherever they are in the world. In fact, all industries.

Jim Grubbs: That's right.

John Chambers: Okay.

Jim Grubbs: That's right. So, we're going to start here. Now, we're on what's called the skid. And this is on an oil platform where we're doing the exploration, we're doing drilling. And what we're going to do is, we're going to log in to our virtual desktop. So, we're using the Citrix receiver client here, for virtual desktop, with the VXC 2200. This is our virtual desktop appliance. Of course, this is also available as an add-on to your IP phones in software form on the Cius, and allows us to run a virtual desktop that's coming off of a server that's sitting back in the data center. So, here's my Windows desktop running here. This allows me then to run high-performance computer applications like this, that I might be running as an engineer out here in the field. But I can also run applications like Collaboration. So we're looking now at Cisco Quad, and as an engineer, maybe I want to connect with the architect. This is our drilling community that we've set up, and I can see all the members. I see their presence information. I see a couple of applets, very specific that we've added for the industry here. And what I'm going to do is search on something called a Bouma Sequence.

John Chambers: Tell me again what it is.

Jim Grubbs: It has to do with the layering in the stone, in the sediment.

John Chambers: So it also tells you, you're getting to where the oil is.

Jim Grubbs: That's right.

John Chambers: Okay.

Jim Grubbs: And so, I need to find a little information on that, so I'm getting a couple of information hits; I'm getting a video hit. Now, you talked about MediaNet being able to automatically transcribe and tag videos so it can be searched on. So now we're finding an expert here who's talking about using the Bouma Sequence to examine the sediment in Drilling Project 150, we can see that what we thought was just deep-water debris is actually a significant portion.

Jim Grubbs: So, we may want to actually take it one step beyond this, and talk to this expert

John Chambers: So basically, the first thing it allows you to do is really brings video to life in your network, as opposed to not being able to find it, or having to watch an hour of video to find the two minutes you want. And to really begin to look at the expert that you may want to bring. And perhaps, if you will, get a second opinion or a third opinion before you decide which expert to bring in.

Jim Grubbs: That's right. And not only those capabilities, it's the features that are built into the routers and the switches that allow us to configure and test and optimize video running in the network as well.

John Chambers: Okay

Jim Grubbs: There are demonstrations on that in the World of Solutions, and we're actually running MediaNet in our network operations center here. so if you get a chance to take a look at it, definitely.

Now, one of the other things I'm able to do with Quad, is find these experts, and you talked about this. So I could see, here's Richard, he's available.

John Chambers: So this could bring social media to life, and it's enterprise social media, as opposed to perhaps what Facebook or others have done. And many of those companies, I think Facebook has been very direct that they do not see themselves as an enterprise company.

Jim Grubbs: That's right.

John Chambers: So it's the ability to bring the attributes of social networking with the bigger enterprise.

Jim Grubbs: Exactly; bring it to the enterprise. So, I can click to chat with Richard, I can click to have a WebEx. I'm going to click to call him.

John Chambers: Okay.

Jim Grubbs: We're going to call him using the telepresence Mobi camera here. We'll have a quick consultation. Hey Richard, how are you doing?

Richard: Pretty good.

Jim Grubbs: We've been drilling here, and I'm a little worried about the sedimentation. It's looking a little dark, we're concerned we may not be in the right spot.

Richard: You're in Tract 154, is that right?

Jim Grubbs: That's right.

Richard: Okay. Why don't I share with you some of the core samples we did on Tract 150 that's right nearby.

Jim Grubbs: Oh, okay.

Richard: So, take a look at what I'm sharing. Is this similar to what you're seeing?

Jim Grubbs: Yeah, it is, as a matter of fact, exactly.

Richard: Okay. What you're looking at is the limestone layer that's on top of what we've got at the sediment layer, or the sandstone.

Jim Grubbs: Right.

Richard: You're about 500 feet above it, right there. That's where we did our core samples.

Jim Grubbs: So, we're in the right spot, then?

Richard: Yeah, you're in the right spot. You're just about 500 feet above the hydrocarbons.

Jim Grubbs: Well, we'll just keep going then.

Richard: Reach out to me any time. Is there anything else that I can answer for you today?

Jim Grubbs: I think that's it, Richard. Thanks.

Richard: Okay. Thank you, Jim.

Jim Grubbs: All right; take care.

John Chambers: So the primary payback application of all collaboration, is the capability to bring experts to a situation, or communities of experts to a situation. This can shorten the innovation cycle by half.

Jim Grubbs: That's true.

John Chambers: And improve our drilling efficiency, etc. And again, it's an architectural play, where you actually tie video to collaboration/information up in the cloud, and a virtual desktop interface.

Jim Grubbs: And we're also tying real-time information here. So you'll notice down in the [bar let] here, we're getting a safety alert. So this will bring me back into the drilling community. Everyone in the community is getting this alert. It talks about unauthorized access to the machine room. If I click on that, it will bring me to video from the machine room. It looks like somebody's in there, having lunch maybe. And through video analytics,we're able to see what's going on. It looks like we got the problem resolved. Again, because everyone on every device, every mobile device, got this notification, and the security folks were able to take care of the problem.

John Chambers: So, it's really about intelligence throughout the network to protect the life.

Jim Grubbs: That's right, that's right. Now John, if you join me over here, we're going to move from the drilling platform, to where we are actually delivering the oil in the pipeline. There's an interesting device here. This is a robot device that is connected then via tether to a wireless box, and it's got a Mobi TelePresence camera in it that will allow us to do inspection of this pipe. This is a flow sensor that we happen to know is defective on this pipe.

John Chambers: We've talked about video everywhere.

Jim Grubbs: That's right.

John Chambers: IP infrastructure, the ability for any device to interface to our collaboration suite.

Jim Grubbs: That's right.

John Chambers: Okay.

Jim Grubbs: And I'm going to use my Cius tablet here. Which of course you talked about the app HQ. This is course is our new enterprise application storefront. It allows enterprises to then be able to publish applications that can be downloaded to Cius devices. So I have Android applications, I also have my virtual desktop here. I've got Cisco Quad. I'm going to go ahead and click on Cisco Quad, and we're going to go into the maintenance community.

John Chambers: Okay.

Jim Grubbs: So we can get information from anyone else who's worked on one of these flow sensors, for example. And I can tie back into my enterprise applications as well. I'm going to click here on applications, and click on "pipeline flow data." I'm getting an access denied. You know what this is, this is SecureX. You talked about an architecture, SecureX, along with out identity services engine--something called ISE, just announced. Gives us the ability to identify who the user is, what it is they're trying to access, what type of device they're using, what network are they coming on, and where they are physically located.

John Chambers: So we might see that we're using the wrong device, or it might be a location we hadn't expected?

Jim Grubbs: Based on policy, it might say, "Sensitive data is only available on campus."

John Chambers: Okay.

Jim Grubbs: Not while you're out in the field, for example.

John Chambers: Okay.

Jim Grubbs: So, this is an example of that, SecureX. Now, I'm going to go ahead and exit out of Quad, and I'm going to open an augmented reality application that will allow me to examine this pipe here. This is my pipeline inspector application.

John Chambers: Okay.

Jim Grubbs: And it's going to use the GPS and motion sensing devices within the pipe here. We can see that flow sensor that's on top of the pipe there. I can even click on that, so that will bring up maintenance history on the flow sensor when it was last replaced. I might want to actually drive the robot down, and put it into an inspection port. I'm going to click here to drive the robot into the pipe. And you can see in the video, we're getting close to that flow sensor. I'm going to tilt up, and finally, I'm going to hit the record button here, and we're going to go ahead and record that video. It looks like there might be a flange out of place that might be causing the flow sensor. And I have the ability then to post this video into my maintenance community. I'm going to click here on "post." And we've now posted that video to the maintenance community. So any of my colleagues can take a look at it, and maybe give us advice on what to do with that.

Now John, you'll notice the Cius is ringing.

John Chambers: Yes?

Jim Grubbs: That's my boss back at headquarters, my other boss.

John Chambers: Okay.

Jim Grubbs: I'm going to go ahead and answer this, if you don't mind.

John Chambers: Please.

Jim Grubbs: Let me just quickly . . . Hello boss.

Boss: Jim, hi.

Jim Grubbs: Hi, how are you doing?

Boss: I'm good! Hey, I just saw your post to Quad. Good work!

Jim Grubbs: Oh, thank you!

Boss: You know, I didn't expect that kind of quality good work from you!

Jim Grubbs: Thank you. I appreciate the compliment.

Boss: No, good work. Hey Jim, I have a thought. I know you have some vacation coming up. I've got two words.

Jim Grubbs: Yeah?

Boss: Las. Vegas.

Jim Grubbs: Oh, Vegas. Yeah, I like Vegas!

Boss: Coming up. And I see a friend, you've got a friend over your shoulder.

Jim Grubbs: Oh, him?

Boss: Yeah, take him. I have a feeling he's going to be a real good luck charm at blackjack.

Jim Grubbs: Oh, all right! Maybe I'll do that. Thanks, Boss.

Boss: Okay, I've got to run into a meeting. You take care, I'll see you.

Jim Grubbs: All right. Take care, bye-bye. All right. So, John, as you saw from the Cius device, not only is it my primary communication device. Of course it has Bluetooth, so you can use it with a Bluetooth headset; it has 3G/4G Wi-Fi. It's my primary communicator, it's in my enterprise application device. It also runs the desktop virtualization software that we talked about. So I can run my Windows desktop software all on a mobile device that I can take to the field.

John Chambers: So, when we talk about collaboration, and when we talk about what's going to occur for this, it really is a combination of mobility; it's a combination of social media, if you will, or social networking.

Jim Grubbs: That's right.

John Chambers: It's about visual and video.

Jim Grubbs:

John Chambers: And it's virtualization in the cloud.

Jim Grubbs: That's right.

John Chambers: And it's about how all of those architecturally play together.

Jim Grubbs: Play together.

Jim Grubbs: When you differentiate systems.

Jim Grubbs: As a matter of fact, we brought a slide showing all of the different components that we've connected here. And I wanted to point out, most importantly, the SecureX architecture on security, which you can learn more about in the borderless sessions that are going on, and the MediaNet capability that optimizes. It's a set of services that runs in the routers and switches and additional appliances, interfaces with our social software in the show-and-share video software, to give you a rich video experience. That's our demonstration!

John Chambers: Jim, awesome as always. Well done.

Jim Grubbs: Thank you. I appreciate it.

John Chambers: So, you can see where we're going. Now let me transfer this up one level. Let me talk about it from the CEO's perspective, or the government leader's perspective. When you have the capability to drive productivity in a company by 5% -10 %, which collaboration combined with the other things you see here today can do, and the CEO's understand that. And Jeff Immelt at GE clearly gets it. He understands when you really begin to think about what video can do with collaboration. He can bring his engineers from anywhere in the world, and the majority of his engineers are in North America and Europe, and the majority of his growth and opportunities are in the emerging markets. He can bring them virtually to those locations, much like you saw in the oil and gas example. But he can also bring them together virtually in ways they haven't done before, with really complex telepresence and video rooms. Which allowed GE to cut their innovation cycle in half, in half, in terms of economy. I don't have to tell you what that means to a company. Proctor & Gamble. What Bob McDonald does there is amazing. The ability to capture the video capabilities, 85 different video rooms, really change how he does his reviews with his counties around the world. He lives off of that, 9,500 individual products areas he reviews on a regular basis. He has his finger on the pulse. It's amazing how they do that. But he also understands what can happen with collaboration, how it can bring together, to really change productivity in his organization.

You think about Verizon. Service providers were used to providing routers and switches. Today, service providers, and Verizon is an excellent example. The leadership of Verizon clearly gets it. They understand that everything is going to be a service. We're partnering with Verizon very tightly in terms of how you bring this to light. How you take the capability and build cloud faster than your peers can build cloud? How you take the capability of cloud, and whether it's hosted collaboration capability or other functionality, to bring it to users at a quicker speed? How do you do it in an architectural approach, building off of UCS and the Nexus, that allows you to get the efficiencies and the scale and the timing I showed you earlier? This is where you see search routers going, moving not from dumb pipes, but moving to intelligent pipes that delivers different and changing services to their customers, either in a business or entertainment world. The ability, if you talk to the CEO of Walmart, Mike Duke, he will tell you his top five priorities as a company align with the Top Five areas that we're working together with them, and the CIO at Cisco with. The ability to completely align with Walgreen's. It's a unique thing, what they're trying to do in terms of how they interface to their customers, how they use their pharmacy in the store, how you use mobility, you unify communications entirely differently. How do you take government areas such as Department of Commerce, that as an example, the patent portfolio that is one million patents deep. It takes a long time to get it done. How do you use collaboration and video to cut that in half in the next 18 to 25 months? The point that I'm making is the power of each of those Five Key focus areas of our company, really brings the network to life, doesn't it? And guess what? They're completely interrelated. When you begin to look, each one of those companies are headed toward the cloud, hopefully with Cisco. Each one of those companies are doing big-time collaboration, hopefully with Cisco. Each one of those companies are focused on video in a different way, hopefully with Cisco.

Each one of those companies are working with Cisco on putting their business and technology architecture at the very top. That's the power that Cisco brings that no other company in the industry brings, the top products in each category and integrated architecture together, in a way that really brings them to life. And I always believed and Rebecca does a great job, that we ought to be the best example of how you use the technology. Look at this event. When I talked to Jim, this may be the most virtual event that's ever been done. The view screen up, 40,000 users. We don't even break a sweat when we do that. Or at least I don't. But it's the ability to do that, and to use MediaNet as the underlying capability on it, and the ability to do this at 1/3 to 1/10 the cost, and at 5 to 10 times the reach. We do our sales meetings virtually, with 17,000 sales leaders from around the world, 120 major locations, as though you were virtually in this auditorium where we have been before.

And when you look at innovative workforce experience, we're doing it ourselves by Quad, 817 communities on. It saved over $1M already. The data center virtualization, the cloud, you saw the benefits we've gotten from it; the video loads, etc. You're also seeing a company that is going to change. We're a $40 billion company, number 1 in 11 to 17 product areas, making $10 billion a year, and you say, "Well, why change?" The answer is, if you don't change you'll be left behind, regardless of size.

For 15 years, we were a router and switch company. When 2001 came about, we realized that that really wasn't stand-alone routing and switching; it was probably not going to be a good market with inadequate growth for the next decades.

We moved to market adjacency, six of them five of which became billion- dollar market leaders. We moved into more of an integration approach, so innovation plus integration, first started to have products mixing together. And you can't disagree with the success throughout most of the 2000-2010 time period. But those same capabilities actually slowed you down. We literally had individual groups, maybe four or five different groups focused on switching, three to five groups focusing on operating systems and software. Different groups around collaboration, and our speed of decision slowed down, and we became more difficult to do business with. So we made a decision to radically change once again, which Cisco has done probably four times in the past. And really simplify where we want to do as a company, around organization changes and how we literally drive productivity and differentiation in the emerging market. Now for those of you, and I know there are a lot of you here, when we were about a company moving to switching, many people questioned could this actually work, and yet worked remarkably well. Our switching is 30 % of our business. When we added service providers, people said that's not your market. You don't understand it. You can't even spell IP telephony for that, we may not be able to spell it, but we know how to get way over 60% of market share in it.

When we moved into 2001, there was a near-death experience for the industry. It knocked us on our tail, like anyone else, we had to restructure. We just look at all people etc. But yet we came back stronger than ever before, and went from a third of the industry's market cap to two thirds of industry's market cap. 2007, we seen the financial crises quicker than anyone else did. They said at first guys you need to Cisco, we adjusted quickly, came through it very strong. We now have one that we're going to focus on, in part, because our company sector's spending is down dramatically. That's 80% off our growth. But mainly because we didn't do quick enough on our switching direction and didn't move quick enough in terms of ease of doing business, and simplify our organization. That's what you will see us doing now. This is how engineering currently works. And I put this up not as an organization chart. But those of you who are intimately familiar with Cisco, you see dramatic changes that had not occurred before. In simple concepts you begin to think about where we are in terms of developed organizations that was done in silos, and by the way, those silos made up very successful throughout most of the 2000s. But they became our weakness later, because our ability to share common operating systems, to share a common [AC] actually began to be a problem, especially when we start to get new competitors. So now bringing that news for the leadership team. Separate switching, routing, and optimizing teams. Bringing that underneath one core technology group. Three major software groups and a number of other teams distributed across engineering. One integrated operating system group. Separate voice, social and WebEx games. Now you have one communication collaboration team. And even in video and search router, we had to also do this for cable versus set-top boxes etc. So we're bringing these architecture together. Make a lot of sense to you?

If we do this right, what are we going to get? Better products, quicker innovation, lower cost, higher quality, we'll know who to talk to and which category, the person who can make it happen, and we can make decisions better. The same thing with the sales organization. Over a period of two decades we hadn't evolved too much. What you're going to see is simplicity in the sales organizations where we're going to move our decisions much closer to customers. Much more focused on individual account managers and SE's touching customers. The ability to bring together enterprise and service provider. The ability to have three regions, where you can learn from emerging countries which often been where new technology is been implemented first, and bring that straight into developed countries. The ability to make decisions quicker because we align services with sales and the ability to rewrite our top five priorities.

So what you see, if we do our job right and we will. Is the ability to seed our decisions. A company that doesn't [mess their own score] also says here's what we've done very well. We're just going to continue to go along. The market is changing and we're going to change faster than anyone else. The speed of decisions is the number thing that I want to see improved with CISCO. Gary Moore, our COO, is leading that effort, and doing an amazing job at it. Streamlining engineering, the courage to do what Todd Lammle did. But we were able to make the changes because of our challenges, that if we tried to do that during normal times, as all of you know with engineers, that would have been a problem. Functional accountability with a very specific ownership. Simplified internal structures, so that you're able to better focus on the customer. Aligned services and sales, which allow us to move quicker. And you can take the capabilities liberty but the head of sales in the area and they head engineering to make those decisions on all of the business costs. And then we took two of our best players, Andy Pyle and Joe Pitman. Joe Pitman from the services side, and of course, many of the critical accounts and services you all have seen. And Andy, who is Gary's right arm in operations, they are the people to get things done, and they said they are going to take ownership for Gary and I to make it an easy company to do business with. Does that make sense to you?

So when you look at where we're going, where will we be in two to three years from now? It will be a company that will lead the future of networking. That will use our top five company priorities, to drive the future networking to change every aspect of our lives in every industry around the world. And do you really think about our core capabilities, collaboration video, and data center architecture that combined with security going across it and with the ability, done simply, will be the future of networking. And it will be the most strategic OS asset I think in your IT portfolio. You will see us move even faster on innovation, and what Cisco has done is, we've gone through peaks and valleys of innovation so over two decades. But each time we began to slow, we said we're going to reinvent ourselves and make dramatic change. You will see us simplify, because these environments are important that they inter-operate and are open, but they've got to work much more effectively together. So we have to have much more simplified structure so it's easier to work with Cisco. More importantly centrified structure so it's easier to for you to do business with Cisco. You will see us leaner and more focused. And if we do our job right, and we're together two, three years from now, and I will be looking at you in the eye, and I will ask you "are we your trusted network provider?"What's going to be your answer? "Yes." Are we going to be your trusted IT adviser? For the net tech the answer was, yes. For the rest of you, you're kind of mixed. My answer I think, would be that we've earned that. Because we will move the efficiency others will not. And then where we're trying to go is to also be your trusted business adviser That is where Cisco is going to go. Our commitment to you, innovation. We are an innovation machine that says how do we, together, innovate in your environment, and to do this in an enterprise mentality in terms of how we do it.

Efficient. You have to be able to be efficient to compete on a global basis. We have to versus our Chinese competitors. You have to in your business as well. We've got to be more focused. Prioritize in terms of where we're going to go. But the one principal we're never going to move away from will be customers. I want you to two years from now to say "you asked, we delivered." Our ability to help you drive the product direction, easier to do business. This is about bringing to you next innovation Cisco right now. I want to thank you for joining us at Cisco Live. I want you to continue to challenge us in the meetings. I want you when you think we can do things differently, make sure that we hear about it. And if you have a chance to for us to meet over the next two and half days, I'll ask a few questions. I'll ask you first, "what do you think we do better?" And then I'll ask you a second, "what do you want to make sure we continue to do?" Thank you for being a part of this today.

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