Chambers: Web 2.0 Basis of Business Model of Future

Cisco Systems Inc. Chairman and CEO John Chambers sees Web 2.0 as the most significant market transition since the first wave of the Internet more than a decade ago. “What our children started with social networking, I think will be the business models of the future,” he said in a global press conference today at the company’s Partner Summit in Las Vegas.

Chambers said Cisco has started restructuring its company around the principles of social networking by delivering the technologies that enable this form of collaboration. Collaboration tools like unified communications and TelePresence, he explained, will drive the next wave in productivity.

Underlying this transformation, he added, is the movement of intelligence into the network, such that the network becomes the platform for communications and collaboration.

The transformation is gaining momentum, he said. “Web 2.0 is two years earlier than I thought – not in the consumer [market] but in the enterprise,” he said. “I am changing my whole organizational structure around this.”

Even with that shortened lead time, Chambers said Cisco is well-positioned, having anticipated the “inflection point” several years ago. The company has a three-year head start on the competition in the unified communications space, he cited as an example.

TelePresence, he said, illustrates innovation that will change business models. “It will change our service, our support and our sales models,” he said. “CEOs get it. They just understand how collaboration will change the way they service their products.”

In his own company, for example, he looks at the application as a way to get his global workforce to realize the company’s vision with greater speed. Chambers said TelePresence has a 50:50 chance to achieve a $1 billion run rate within three years. Typically, it takes five, he said.

“With this collaboration movement and with this virtualization of processing and storage and applications with any device capable of getting access to any information …, it opens up almost unlimited opportunities for us,” he said.

Cisco Systems Inc. www.cisco.com