Cisco CEO John Chambers Answers the COO Question (And More)

Cisco Partner Summit John Chambers

First, let The VAR Guy set the stage. A few weeks ago, Chambers told Wall Street that he’s somewhat concerned about weak IT spending in the government sector. A few days after the earnings call, Cisco promoted Executive VP Gary Moore — a long-time Cisco veteran — into the Chief Operating Officer post. Still, Chambers — ever the optimist — sounds upbeat at Cisco Partner Summit.

Now, the key discussion points from the Q&A…

1. The COO Announcement: Chambers went to the Cisco board of directors about potentially naming a COO a few days before the COO announcement actually took place, he said during today’s Q&A.

Read between the lines and that’s pretty intriguing. During the press conference, Chambers said he’s been thinking about creating a COO post for about 10 years. But he actually pulled the trigger and created the post a few days after announcing an earnings outlook that concerned some investors. Both Network World and The VAR Guy openly asked if the COO move was reactionary to Wall Street, but Chambers said it was a pro-active move.

2. Don’t Go Commodity: CRN asked Chambers if the company can continue to drive higher-margin, more expensive product sales as lower-cost networking products move into the market. In response, Chambers warned partners not to follow rival hardware vendors down the commodity road. “How do you earn the value?” said Chambers? He suggested connecting the dots between wired, wireless, data centers and the cloud.

3. Cloud: Chambers said he told Cisco’s incoming CTO two years ago to get going on a cloud strategy. Of the 2,000 partners at the conference, the majority have a business model that involve Cisco networking and partner services. Putting a eight servers in a room is not a cloud. It has to be scalable and elastic, said Executive VP Rob Lloyd.

4. New Product Sales: Roughly 30 percent of Cisco’s revenues involve new products, and more than 80 percent of those new product sales involve the channel, according to Chambers.

5. SMB Push: A few small and midsize business questions popped up. Chambers indicated that the company won’t be satisfied until the company has 40 percent market share — or more — in certain SMB segments. The VAR Guy hopes to share more details on March 2, when Cisco is expected to describe more SMB efforts.

6. Distributors: Cisco insisted that distributors can participate in the cloud channel. At least one Cisco executive described distributors as Cloud Aggregators. Perhaps not by coincidence that’s Ingram Micro’s cloud strategy.

7. On Hewlett-Packard CEO Leo Apotheker: “I like Leo,” said Chambers. “I think he’s a good man. I just wish he wasn’t at HP.”

8. On Relationships With Software Vendors (ISVs): “This is an area where Cisco need to do better,” conceded Chambers. “If software becomes more and more important and we need to expand on our execution.” Added Lloyd: “We’ve been focused on traditional ISVs, but we need to focus on [new] ISVs that unleash open applications on top of our platform.”

9. Big Business: Ten thousand customers have deployed the Nexus architecture, said Chambers. Plus, Lloyd said the Nexus architecture is the foundation for building clouds. Lloyd claimed Cisco is years ahead of a certain rival (hmmm… HP?) on the cloud front.

10. Interesting Observation: This is the second consecutive year that Cisco Executive VP Rob Lloyd has participated in the Q&A session with Chambers and the media. The channel executive team reports to Lloyd. The VAR Guy wonders just how far up the executive ladder Lloyd will ultimately climb. Chambers has previously stated that he intends to stick around at Cisco as CEO for years to come…

11. Hit List: Eighteen of Cisco’s top 20 products are the best products in the market, Chambers asserted. The VAR Guy wonders… which two aren’t tops on Chambers’ list? He wouldn’t say. Chambers concluded, “I like our hand.”

12. Security: Yes, Cisco has to absolutely improve its security through network intelligence. It’s the number one priority in R&D. “If we don’t solve it, it will slow the entire industry.”

13. Faster than Moore’s Law: That’s Cisco’s R&D strategy for switching, Chambers asserted.

14. Don’t Get Distracted By Price: “When you lead with price as your differentiator you have no differentiator,” said Chambers.

15. The Microsoft Factor: During keynote discussions today, Cisco mentioned VMware, Citrix and Red Hat as virtualization partners. Microsoft Hyper-V was noticeably absent from the list. Asked where Microsoft fits in the Cisco strategy, Chambers said there’s competition and cooperation — but neither he nor Lloyd would speculate whether Cisco would specifically partner with Microsoft on Hyper-V. Chambers said Cisco will continue to support open standards to ensure interoperability…

16. Will Cloud Kill Infrastructure Brands Like Cisco?: Chambers said Cisco has to listen to critics. But service providers are branding with Cisco, and that will continue in the cloud, he added.

That’s all for now. A separate Q&A with Channel Leaders Edison Peres and Keith Goodwin are set to host a separate Q&A shortly. More perspectives soon.

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