You had the option of doing that without getting into those businesses yourself. What explains acquisition of, say, an application services company like WebEx?
One of the mistakes that many companies make is that they think if they understand one market, they can move into another market. Almost no high tech company in the history has ever done that successfully. And, if you move into another market, do you get a minimum 40% market share? Do you get very good profits in it? Do you grow your overall market share? Under these scenarios, 90% of the acquisitions fail. There are probably only two or three high-tech companies in the world which have two to three major product lines where they are the #1 player, with good profit and very good growth. Cisco has two dozen. So, we understand how to enter the market and how to understand what our sustainable differentiation is.

"To be able to show you how to do it, we do it ourselves first. Last time it took us four years; this time around, it will take us twelve months"

WebEx is the #1 player in conferencing, with a 40% market share. And, we did not do it as a standalone application. We clearly did it to tap telepresence. These are not separate pieces. These are really integrated together. It is like being able to watch a sporting event like a cricket match together when your family is spread out throughout the country. This changes everything. This is going to be a huge wave. We are very clear that we are approaching it architecturally, not as individual products or single markets. To be able to show you how you to do it, we do it ourselves first.

That is what you did last time around as well
Exactly. It is the same principle. The only difference is that the first time it took us four years. This time, it is going to take us twelve months. We have worked on collaborations. The technology part is actually very easy. So, we worked on collaboration as a company for almost four years. The first couple of years were hard. People were not used to shift from command and control to empowered teamwork. We would not have been able to come to India without unified communication and telepresence.

If you are successful in what you are pursuing, this could put you in direct competition with the likes of Microsoft and Google. In fact, you are already competing with Microsoft
I look at it a little differently. This may surprise you. But, I have never focused on competition. I have focused on getting market transitions right and being there three to five years ahead of our competitors.

But, to really answer your question, if the network plays the primary role, and intelligence resides in the network, then the network becomes the platform for all forms of IT and communications. And, whether it is in consumer or business areas, most of our peers will move in that direction. The action will shift to the network. Almost all forms of productivity will be network enabled, directly or indirectly, with scope for collaboration. We intend to lead in collaboration. We intend to lead in network. We intend to lead in home too. Yes, we will have a number of new partners and a number of new competitors.

So, where do India and the much-publicized globalization center fit in?
Five hundred seventy five thousand engineers a year is a huge number. Compare that with the US, which has 60,000 a year. I know there are different skill levels. But, if the top 5% of your population goes to this industry, that is what I am after. You combine that with an environment where it is going to be one of the largest global economies by 2025, with a culture that knows how to innovate and one that knows how to partner, has a young population, and a government that is open to new ideas, I think it is a unique combination. What Cisco is going to do here is not labor arbitrage. We are going to approach it in a different way. We are here to enable disruptive business models. That is the reason I am here.

I think what we are going to do in India is first we will prove it in India; then it will go to developing countries; then, it will go to developed countries. This is the model for Cisco in India. This will be a globalization center, Cisco East. And, it will probably develop our second world headquarters.

What most companies have done here is labor arbitrage. We are using India to create disruptive business models. We will have 20% of our top talent by 2015 in India. But, why did you choose India?
We came here to partner with a country that understands how to partner. That is a huge advantage for India. Your competitors do not understand how to do that. You have democracy, English speaking capability. But, we are also seeing a country that is beginning to innovate. In terms of weaknesses, like it is in all democracies, the ability to argue back and forth means things take time to happen. But, in the end, that probably wins.

A countrys future depends upon its education system, its infrastructure, innovation, catching market transitions, and supportive government. India has all the above. Even in infrastructure, which is still evolving, it is not following the US and Western Europe, but skipping a generation.

You look at the area of catching market transitions. India will be an example that emerging markets will follow on different business model changesthe ability to cut out the middlemen from the retail supply chain, straight from farmers to retail; the ability to charge one cent per minute for a voice phone call and still make profits; the ability to climb up in the services value chain, from back office to other high value areas. We are here to partner with Indian companies in those changes together with them.

Shyamanuja Das
shyamanujad@cybermedia.co.in

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