John Chambers: Then & Now

Market Clout
2002: We only do things where we add sustainable advantage. We partner and outsource everything else. It's not an ad-hoc approach, and it isn't something that we changed when we were in trouble. We're gaining more market share at a faster pace than we ever have before.
2003: Look at the financial analysts' analysis of the whole networking marketplace; we have about 75 percent of that valuation. So, relative to the marketplace as a whole, [the financial press and analysts] are voting that our future is that of our next 11 competitors combined, times three, which is pretty optimistic.

Cisco Execution In a Tough Economy
2002: When we grew at 2 percent, our peers were down by 38 percent....That's the biggest breakaway that has ever occurred in our industry, probably by a factor of four. So we are now in a different situation than last year, when we were in a bit of a free fall and trying to get our feet underneath us.
2003: I think most key industry analysts would give us unbelievable marks, maybe even better than what we deserve, for how we have executed in a tough market, in terms of technology leadership, customer loyalty, movements into new markets, operational model and profitability--which returned to where it was at height of the bubble--and yet passing through the product price-performance improvements at a faster pace than ever.

Advice For Partners
2002: In situations where it's all about price, nobody wins. So, it's how each of the partners says, "Here's my differentiation; here's how I position myself in the market to customers, to joint customers and to Cisco." They need to say what segments they are going to play in and to be realistic. If you haven't got a differentiated plan, and you've got other large competitors that are much more cost-effective with higher productivity and higher customer satisfaction, you're not going to win.
2003: If you know your industry segment is going to consolidate, then you know you've got to decide if you're a mass mover of product with very little support and, therefore, have to have the overhead to go with that, or if you can add a lot of support but have to be able to differentiate that support and price it differently....

Product Dumping By Telco Giants
2002: The ecosystem, I think actually works well. [Carriers] are after transport and volume of transport. My value-added partners are after what value they add on that, which generates more load, and I'm after getting a satisfied customer and good profits. Those three actually go well together. Having said that, we have to be firmer with the partners that are misusing their positions in the industry, which we will do.
2003: I think most people would give us very good grades on both stepping up [to the problem] and the results they have seen. Now that will be an ongoing process with other service providers. But I think focusing on people adding value to the product vs. the discounts they get is what we fully expect.

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Priorities For Cisco
2002: [What] we are focusing on is an overall architecture, for data, voice and video, and also the network of networks--not just an end-to-end architecture in an account, but how that works seamlessly with service providers, the Internet, the combination of cable, etc. Whoever figures that out will find huge opportunities.
2003: We're already the No. 1 or No. 2 player in most of the security areas, such as VPNs, firewalls, intrusion detection, etc. If we begin to monitor what goes through a network at the port level on the routers and switches, we are really uniquely positioned to be a key player.