Cisco CEO Chambers: Expect 'Brutal' Industry Consolidation Around Internet Of Everything

"What the industry leaders, the people who really disrupt in this industry -- and make no mistake about it, we are going to be the disruptor -- what they do is, each time [a new technology] becomes mainline, they move," Chambers said during his keynote address Wednesday at the Interop event, taking place this week in New York City.

"The next big wave is going to be around the Internet of Everything," Chambers continued. "It will be implemented by combining things, with processes, with business changes, with people. And, it will drive a productivity number, and a financial number, that is just mind-boggling."

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Chambers positioned the Internet of Everything -- or, as Cisco defines it, the growing network of physical objects that can communicate with one another and people via the Internet -- as the fourth major phase of the Web. The first, he said, was connectivity, followed by the "networked economy" or the e-commerce boom, and the third was the emergence of social media, mobility and the cloud.

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The Internet of Everything, a market Cisco values at roughly $14 trillion, is next in line.

As the Internet of Everything continues to take form, Cisco projects there to be 10 billion Internet-connected devices by 2016, including machine-to-machine modules, and an even greater 50 billion devices by 2020. To put that in perspective, Chambers said there were only 1 billion connected devices as recently as 2008.

Capturing the opportunity being created by this device and application explosion is what will separate those vendors that stick around for the long term, from those that don't, Chambers said.

"There is going to be a brutal consolidation in this industry -- brutal. Just like there was in communications, you will see the same thing in IT occur, and it will be an application economy," Chambers said. "What I'm talking about today isn't a proof of concept. It's three to five years out. I'm talking about painting a road map for the whole industry, where the industry is going to go and how we are delivering on it today."

Chambers stressed that it's not enough for Cisco to just recognize and keep pace with market transitions like the Internet of Everything but to transform its technology accordingly.

"The survivors in each of our industries are going to be those who learn to change with tremendous speed," he said. "But speed without process or a design behind it does not work."

To cash in on this massive Internet of Everything opportunity, Chambers said Cisco is moving toward what it calls an "application-centric infrastructure," a new kind of data center architecture aimed at making networks more programmable, automated and equipped to handle the new wave of business applications emerging from trends like the Internet of Everything.

This application-centric infrastructure is what's incubating inside Insieme Networks, the SDN-focused spin-in Cisco plans to formally unveil Nov. 6.

"That's what you are going to see us lead with as a company over the next year -- an application-centric infrastructure that gives you the best of the ability to change rapidly, hit your issues on programmability and openness, and transform your business in a very positive way as you move forward," Chambers said.

Cisco has rolled out a number of other technologies over the past few months targeting the Internet of Everything, including a new series of routers for service providers and a new lineup of surveillance and physical security technologies.