Firm aims to challenge Cisco with new offering, claiming its rival has been overcharging customers.
Hewlett-Packard Co. unveiled Monday a corporate technology architecture that it said will simplify and lower the cost of data-center systems.

The initiative was aimed at the dominant player in the networking market: rival Cisco Systems Inc. , which, according to a top H-P executive, has been overcharging customers.

H-P said its FlexNetwork architecture would allow businesses to set up and run a streamlined network without necessarily locking them into specific vendors.

The Palo Alto, Calif.-based company said the new architecture was unlike that offered by Cisco.

“Single-vendor, proprietary approaches, such as Cisco’s, lock in customers while driving up cost and complexity with different architectures required at each point in the network, including data center, campus and branch,” H-P said in a statement.

David Donatelli, general manager of H-P’s enterprise servers, storage and networking business, referred to Cisco’s recent reorganizing push, saying in a phone interview, “The challenge Cisco faces is when you’re so dependent on charging such exorbitant margins, you have to make changes to your business model.”

The H-P announcement highlighted the company’s intensifying rivalry with onetime partner Cisco in the corporate tech market. H-P has become aggressive in the networking market, while Cisco has been pushing into the blade server market, where H-P is a major player.

Cisco could not immediately be reached for comment.

San Jose, Calif.-based Cisco recently said it was making major changes to its operations in the face of criticism that its bid to expand into new markets left it vulnerable in its core networking markets.

Meanwhile, H-P has also undergone a major management transition, after hiring Chief Executive Leo Apotheker late last year.
Gleacher & Co. analyst Brian Marshall said the H-P announcement highlights the company’s strength as a player with “every piece of the puzzle.” He was referring to H-P’s strong position in a broad range of tech hardware markets, including personal computers and servers.

“They’re offering a converged infrastructure without vendor lock-in,” he said in an interview. “You can rip and replace individual components if you want to.”

At last check, shares of H-P added about 0.6%, while those of Cisco rose fractionally.

Cisco has stumbled, realized it needed to change course and has begun to make those changes. This week’s management and business unit restructuring is the most recent change.

But how did it get to this point? How did things get this bad?

There are three key factors, three big weaknesses in Cisco’s operations: over-ambition, distraction and mismanagement.

Ambition

Cisco has always boasted about how it has left its traditional competitors behind, how it is the industry’s visionary, and how it can spot market transitions three to five years before they become obvious to everyone else. And in an effort to maintain its 12% to 17% annual growth targets while its core routing and switching markets matured and slowed, Cisco pursued 30 or so markets adjacent to those core businesses.

Analysts and pundits have long suggested these market adjacencies would distract the company; Cisco always scoffed at the notion, but alas, it’s come to pass.

The first and second quarters of Cisco’s fiscal 2011 proved that Cisco obviously bit off more than it could chew. Its core switching and routing businesses slumped, but so too did its consumer business. In the second fiscal quarter, switching revenue was down 7% from the previous year and the consumer business was down 15% — an indication that Cisco may not be as adept at spotting or capitalizing on market transitions as it claims.

Chambers admitted as much at the Cisco Partner Summit conference in March, promised to refocus the company on its core businesses in an April memo, and then lopped off its Flip videocam business a week later.

Cisco also realigned other consumer businesses, eliminated 550 jobs in those businesses, gutted its EoS media and entertainment operating system, and leaned more on its Linksys home networking operations to contribute to the core business.

WHERE TO GO: What would a revamped Cisco look like?

Analysts are still calling for Cisco to do more, perhaps divesting itself of its Scientific-Atlanta cable set-top box business, which it acquired for close to $7 billion in 2005. That acquisition was preceded by Linksys, for $500 million in 2003; and followed up by Pure Digital, maker of the Flip videocam, in 2009 for $590 million. That’s $8 billion invested in acquiring consumer businesses since 2003, not counting how much R&D was spent on these product and markets since then.

Cisco’s ambition in moving into these and the other markets caused it to forsake its bread-and-butter business. In the end, the company killed off a big chunk of its ambition. How many more of those 30 market adjacencies will end up the same way?

Distraction

Chambers said the product transition that caused a plunge in switching revenue and profits in the second fiscal quarter took the company by surprise. In a subsequent memo, Chambers said the company lost focus, and was slow to make decisions and execute. He said Cisco needed to better align operations with innovation (i.e., product development).

Chalk these shortcomings up to distraction. For whatever reason, Cisco took its eye off the product transition ball, injecting the market with lower-margin/higher-performance gear that killed demand for more lucrative platforms. It upset the balance.

Perhaps Cisco was preoccupied with the performance of all of its newer businesses? Perhaps distracted by the disappointing results in its consumer business? Perhaps plotting the eventual closure of the Flip videocam business?

Whatever the reason, Cisco bungled a major product transition in its core, bedrock business, which is a no-no in any company, much less a public Fortune 100 titan. The effects took the company by surprise, which confirms that it was not paying close enough attention to the logistics of the transition.

Cisco is now attempting to rededicate itself to core routing and switching, lopping off Flip and winnowing down its consumer operations. Expect this renewed focus to be an ongoing trait as Cisco bulks up its core business and perhaps looks to exit more adjacent markets.

Management

Loss of focus, slow decision-making, lack of execution, distraction, even the ambition (or overconfidence?) to try to enter 30 adjacent markets — these are symptoms of mismanagement.

Before this week, Cisco management was comprised of nine boards and councils. These boards and councils were instituted by Chambers in 2007 to instill a more horizontal, less siloed decision-making process, which was intended to improve the company’s coordination and efficiency in developing integrated products and systems. They are staffed by the heads of Cisco’s product development and marketing groups, and the CTO.

There are a lot of ideas and agendas — and egos — to manage along with the operations of a $40 billion company attempting to broaden its presence in so many non-core markets. It’s now apparent — via this week’s reorganization that reduced those councils from nine to three, and Chambers’ memo that Cisco lost focus, was slow to make decisions and failed to execute — that the structure contributed to the company’s misfiring in the last two or so quarters.

Analysts are generally positive on Cisco’s effort to streamline the board/council structure. Some would like Cisco to pare down more of its businesses — especially more of the consumer operations — but whether it will is unclear.

Cisco Systems launched its first containerized data center on Monday, coming late to the party but offering some unique management features that could help set it apart from other vendors.

Containerized data centers typically are standard 20- or 40-foot shipping containers packed with servers, switches and other IT equipment. Pioneered by companies such as Verari Systems and Sun Microsystems, they’re used to quickly add extra capacity to an existing data center or to bring capacity to a remote location, such as an oil exploration site or a battlefield.

Cisco has opted for a 40-foot container that it says can be up and running in 90 to 120 days from when an order is placed. Like other vendors in the market, Cisco expects customers to stock the containers primarily with its own products, but the racks inside can accommodate other vendors’ equipment as well, said Keith Siracuse, a manager and product marketing engineer at Cisco.

Because they are small, self-contained environments, containerized data centers can be made highly energy-efficient. Cisco has gone a step further than other vendors by designing racks that each have their own enclosure, so the temperature for each can be set individually.

That allows customers to operate individual racks at slightly warmer or cooler temperatures, depending on the equipment inside and the workload, which helps squeeze out more energy savings.

The container can house up to 16 racks, with a maximum power capacity of 25 kW per rack. The containers can be parked side by side or stacked two deep to save floor space.

“You’re able to put a lot more equipment, and get much better power utilization, versus the floor space in a traditional data center,” Siracuse said.

Cisco opted for a chilled water cooling system that is housed in the floor of the container, under the racks. That means equipment is less likely to get damaged in the event of a water leak, he said. Most other vendors run the chilled water above the servers. Leaks aren’t a common occurrence, but it’s a concern that data center operators sometimes cite when considering water-based cooling systems.

The container comes with a new management tool, Cisco Data Center Operations 360, which monitors the rack temperature and other variables in real time and generates historical reports for analysis.

Customers can set the desired temperature range for each rack, and the software adjusts the fan speeds and water flow accordingly. Operations 360 also has tools for capacity planning and to design the layout inside the container.

Containerized data centers can be located next to an existing facility, where they share the same backup generator and water supply. If they are used remotely, the infrastructure is housed in a separate container.

Cisco doesn’t provide that infrastructure or the services to put it together. It has partnered with “master integrators,” such as Johnson Controls, that will do that work for the customer.

Other vendors that already sell containerized data centers, including IBM, Hewlett-Packard, Dell and i/o Data Centers, haven’t disclosed shipment figures. It’s not thought to be a big market — IDC has estimated a few hundred units per year — but the big IT vendors see enough potential that nearly all now have an offering.

“Over the past year we’ve really started to see this market gain traction,” Siracuse said. There’s a lot of interest from the health care market, oil and gas exploration companies, government agencies, and the education market, including academic research centers that are running out of data center capacity, he said.

Cisco’s entry in the market steps up its rivalry with HP, IBM and Dell, which have already seen Cisco encroach on their server businesses with its Unified Computing System, which combines server hardware and network gear in a single package.

“We’re trying to expand our data center applications, and we need this as part of the portfolio,” Siracuse said. “This is our first product. We’ll be looking at other solutions moving forward,” he said.

Pricing will vary depending on how the product is configured and deployed, he said. In general, containerized data centers typically cost more than US$1 million, including the IT equipment inside.

John Chambers, the veteran chief executive of Cisco Systems Inc., confessed the once highflying technology company has lost its focus, lacks discipline and needs to overhaul its operations.

“We have disappointed our investors and we have confused our employees,” Mr. Chambers, who has been Cisco’s chief since 1995, told employees in a companywide email.

Mr. Chambers defended his strategy but said Cisco would “make a number of targeted moves” and “address with surgical precision what we need to fix in our portfolio,” suggesting changes to its operations—and possibly cost cuts—would be coming.

Cisco declined to comment beyond the memo or make Mr. Chambers available.

The email comes after the San Jose, Calif., company has reported two quarters of disappointing results and several executive-level changes.

The company has come under pressure from rivals including Hewlett-Packard Co. in its core business of selling the networking systems that form the plumbing of the Internet.

Meanwhile, Cisco has expanded aggressively into dozens of new markets—from consumer camcorders to video screens in sports stadiums—in search of growth.

In February, Cisco posted an 18% drop in quarterly profit and a 6% sales increase, amid growing pressures in its core network-switching business from rivals Hewlett-Packard Co. and Juniper Networks Inc. Later that month, Cisco promoted Gary Moore to the new position of chief operating officer, marking the first time Mr. Chambers has had a clear No. 2 since 2007.

The appointment followed the departures of two high-profile executives—consumer-products head Jonathan Kaplan and chief marketing officer Susan Bostrom—in as many months.

Cisco’s stock has slid more than 30% over the past 12 months, even as the Nasdaq Composite Index has risen 15%. On Tuesday, it rose 16 cents, or 0.9%, to $17.22 in 4 p.m. trading on the Nasdaq Stock Market.

Cisco declined to make Mr. Chambers or Mr. Moore available for interviews or to provide additional comment. Reuters earlier reported Mr. Chambers’s memo.

Brian Modoff, an analyst at Deutsche Bank Securities, said the memo may be an attempt to “rally the troops” after string of disappointing results. He said Cisco has entered markets too far afield from its core networking business. Cisco’s portfolio “may have gotten too big,” Mr. Modoff said. “They’re realizing that growth for growth’s sake is not working for them. They need to focus.”

In Monday’s memo, Mr. Chambers defended his strategy of expanding into new businesses in order to help customers take advantage of network-related technological advancements. “Our strategy is sound. It is aspects of our operational execution that are not,” said Mr. Chambers, who has been Cisco’s chief since 1995 and who rarely sends companywide communications in writing, preferring video missives instead.

“We have been slow to make decisions, we have had surprises where we should not, and we have lost the accountability that has been a hallmark of our ability to execute consistently for our customers and our shareholders…” Mr. Chambers wrote. “That is unacceptable. And it is exactly what we will attack.”

The CEO said he and Mr. Moore would lead an effort to simplify Cisco’s operations. In 2009, Mr. Chambers overhauled the company’s management system, layering on a number of executive committees—dubbed councils and boards— in order to help him oversee its growing number of businesses.

Cisco Systems Inc. posted an 18% profit drop in its latest quarter amid growing competitive pressures in its core network switching business despite a 6% increase in overall sales.

The San Jose, Calif., technology company said fiscal second quarter income fell to $1.5 billion, or 27 cents a share, from $1.9 billion, or 32 cents a share, a year earlier.

Revenue in the quarter ended Jan. 29 rose to $10.4 billion from $9.8 billion a year earlier.

The company also forecast a revenue increase of between 4% and 6% in the current quarter, which will have one fewer week of sales than the same period a year-ago.

While results came in slightly above Cisco’s November guidance of between 3% and 5% revenue growth for the quarter, the networking-equipment giant reported a 7% decline in revenue from switches. Switches, which help computers connect to each other, account for about a third of Cisco’s revenues and are one of the company’s two biggest businesses; routers represent 16% of revenue.

Its gross margin, or profit after product costs, fell as the company sold more low-end products and introduced a new line of switches.

The weakness sent Cisco’s shares tumbling in after-hours trading by nearly 9% to $20.14 after ending 4 p.m. trading at $22.04.

In a conference call, Cisco Chief Executive John Chambers struck a cautious note similar to his remarks after the prior quarter, when a lukewarm forecast sent its shares tumbling. This time, Mr. Chambers noted that some of the difficulties he highlighted in November had persisted, such as declining sales of cable set-top boxes. He also said orders from government customers rose 9% in the U.S., amid a 7% increase in public-sector orders world-wide, but warned that its U.S. government business “will worsen over the next several quarters.”

“We need to execute better,” Mr. Chambers said. “I think we will look back on this period of time and wish we could have avoided it and yet it will make us stronger in the long run.”

Cisco’s results contrast sharply with other technology suppliers, many of which have reported strong sales and profit increases amid an ongoing rebound in corporate spending on technology.

Network rival Juniper Networks Inc. recently posted a 26% increase in sales, for instance. In January, tech giants EMC Corp. and International Business Machines Corp. also posted record quarterly revenue and profits.

Cisco, which continues to expand beyond its traditional business selling network routers and switches, is among the first big technology companies to report results from the month of January. It long has been considered a bellwether for the tech industry, but its divergence from the pack in recent months has left Wall Street questioning that assumption.

Deutsche Bank analyst Brian Modoff said Cisco’s latest results raise questions about whether the company can achieve its longer-term growth forecast of 12% to 17% annual revenue growth. “Why is Cisco not seeing the same benefit as some of the other vendors?” Mr. Modoff said. “The question right now for Cisco is: can they grow at a good rate given their size?”

For the quarter, Cisco posted a 4% increase in sales of routers. Sales of consumer products fell 15%. Mr. Chambers said Cisco’s revenue from cable set-top boxes fell 29%, offset somewhat by an increase in its smaller Internet set-top box business.

He also said that orders from large U.S. businesses, excluding financial-services companies, rose more than 20%, offering further evidence of a rebound in business technology spending.

Sept. 24 (Bloomberg) — Cisco Systems Inc. Chief Executive Officer John Chambers said the global economy is on the verge of a productivity increase, driven by collaboration and social networking.

Companies around the world are likely to see a 7-year to 10-year increase in worker productivity, Chambers said today in an interview on Bloomberg Television’s “InBusiness With Margaret Brennan.”

“Part of the reason I’m optimistic about our economy long run is I believe we’re at the front end of a productivity shift much like we saw from 1997 through 2004,” Chambers said.

Most chief executives Cisco talks to are planning for U.S. economic growth of 2 percent or less this year, Chambers said. The company dominates the market for routers and switches that direct the flow of Internet traffic over computer networks, making it an indicator of the health of the technology industry.

Chambers, who took over in 1995, has overseen Cisco’s growth to a $40 billion company that’s made more than 100 acquisitions. He’s pushing Cisco into 30 new markets such as smart grids, video-conferencing and home networking. By promoting video cameras such as the Flip and the TelePresence conferencing system, Cisco is trying to generate more Internet traffic, increasing demand for its routers and switches.

Cisco, based in San Jose, California, rose 58 cents, or 2.7 percent, to $22.11 at 11:46 a.m. New York time in trading on the Nasdaq Stock Market.

Chambers, 61, has said that he wants to bring at least $30 billion in cash back to the U.S. and that tax laws make it too expensive to do so. He’s called for a tax repatriation break, saying Cisco will increase its U.S. headcount by 10 percent if a favorable law is passed.

The company said this month it will initiate its first dividend this fiscal year after facing pressure from investors. The size and timing of the payout will depend on tax laws and repatriation policy, because much of Cisco’s cash is abroad, Cisco said.

Technology companies from Cisco Systems Inc. (CSCO) to ABB Ltd. (ABB) are angling for pieces of the smart grid, the next-generation electricity-delivery network designed to monitor consumption better at households and businesses.

San Jose (Calif.)-based Cisco, the largest maker of computer-networking equipment and a producer of energy-monitoring devices, has partnered with meter-maker Itron Inc. (ITRI) for contracts. Zurich-based ABB, the biggest builder of electricity networks, is developing automation devices for power lines.

With $200 billion in global smart-grid investment expected in 2008 to 2015 by the Pike Research group, with almost $53 billion just in the U.S., technology companies have joined established power-systems suppliers as contestants in the power-management market.

Rather than employing a single technology, the smart grid comprises a network of networks that makes possible real-time two-way communication between power providers and users, omnipresent sensing control, and distributed automation throughout the electrical generation network.

The key difference between the current and future grids: decentralized management of electric power. That’s essential when demand for electricity surges as a result of increased consumption.

Smart-grid technology will be a key driver of the $750 billion in incremental spending that Goldman Sachs Group Inc. (GS) foresees for the global transmission and distribution market over the next 30 years, according to a Sept. 15 research note.

Stimulus Grants
In the U.S., development of the smart grid is near a critical point. Utilities face a Sept. 30 deadline to report their plans, budgets, and choice of vendors and technology for approved smart-grid projects to the U.S. Energy Dept. in order to qualify for $3.4 billion in federal stimulus grants.

Just how much of the money that utilities plan to spend on substation and transformer upgrades can be classified as smart-grid investments is open to debate since utilities’ long-term capital budgets include upgrades anyway, says Andy Roehr, head of Smart Energy Services at Capgemini, a consulting firm to the utilities and other tech-oriented industries.

While a piece of the smart-grid pie will go to traditional suppliers of power-line equipment such as ABB and General Electric Co. (GE), the communication network that needs to be built is entirely new and is attracting Cisco, privately held Silver Spring Networks, and eventually some telecommunications providers.

$15 Billion Opportunity
Cisco expects $15 billion to $20 billion in global opportunities to join electrical infrastructure with information technology over the next seven years.

“It’s not going to happen overnight. A lot of regulatory issues have to be worked out,” says Jennifer Gresson, a company spokeswoman.

Last year, Cisco began to sell a building mediator that tells facilities managers how much power elevators, heating and cooling systems, and other equipment are using and centralizes the information flow so they can monitor multiple business locations at once.

Cisco says one customer, NetApp Inc. (NTAP), a storage and data management provider, reported $2 million in savings in less than one year from using the building mediator. In 2011, Cisco plans to roll out a home energy controller that performs the same service for consumers.

Variable Power Prices
Investment right now in the smart grid primarily means advanced metering infrastructure, one goal of which is to move billing from flat rates to variable rates based on time-of-use and letting consumers adjust their use accordingly.

Utilities have already contracted with meter vendors for one-third of the roughly 147 million total customer endpoints in the U.S. and another 40 million to 50 million will be contracted over the next two to three years, says Howard Scott, a managing partner at Cognyst Advisors, a consulting firm to the power industry.

Electric smart meter shipments totaled 4.5 million in the second quarter of 2010, compared with 3.7 million in the first quarter, according to Scott’s August report on deployment of automated meters in North America. Total shipments for 2010 are projected at 15.8 million, up from 10.9 million in 2009.

To be sure, utilities are finding it hard to convince state public utility commissions of the financial benefits of these projects, as reported in Bloomberg Businessweek’s Sept. 20 issue.

Higher Electricity Rates?
Utilities need state regulators’ approval to make capital investments that are ultimately recouped by charging ratepayers more for electricity. And fiscal constraints due to the recession and slow recovery have hampered smart-grid investment among municipal-owned utilities.

In the end, the smart grid may prove to be less about lowering ratepayers’ bills than better managing increasing power loads. Experts are watching one thing in particular: electric vehicles. The number of plug-in cars and trucks is expected to reach 841,000 in the U.S. by the end of 2015, according to Pike Research.

Itron’s advanced meter shipments, which include electric, gas, and water meters, have been far ahead of its competitors in each of the past five years and its projected volume in 2010 is roughly equivalent to the combined volume of its two closest rivals, Sensus USA Inc. and Silver Spring Networks.

Itron, the only publicly traded pure-play meter provider, saw its revenue jump 38 percent from a year earlier to $569 million in the second quarter, while North American revenue of $303 million more than doubled.

Meter Contracts
The Liberty Lake (Wash.)-based company has 14 million meters currently contracted and has delivered more than 3 million of those. Virtually all of its deliveries have been to its biggest customers: Southern California Edison Co., San Diego Gas & Electric, CenterPoint Energy Inc. (CNP) in Texas, and Detroit Edison Co.

Itron announced a strategic alliance with Cisco on Sept. 1 that aims to create a definitive Internet Protocol-based communications platform for the smart-grid market. By standardizing the communications platform and having a leading network provider as a partner, “we think we can really accelerate adoption” in the industry, says Philip Mezey, chief operating officer of Itron North America.

Some industry experts say reliance on any one communication protocol or vendor may be a hindrance, given the need for communication between many different grid-linked devices in the future. This could help give San Jose-based Echelon Corp. (ELON) a market advantage.

Echelon, Duke Energy
Echelon’s new control system software platform, ECoS, is designed to be flexible enough to connect to multiple communications mediums such as Wi-Fi, 3G, and 900-megaherz radio frequency.

Duke Energy Corp. (DUK), which serves 4 million customers in five states, signed up on Sept. 3 to be the first user, with a $14.5 million order. Duke could eventually contract for well over 1 million units, Wedbush Equity Research said in a Sept. 9 research note.

Ultimately, semiconductor manufacturers may be the biggest beneficiaries as the smart grid is built. Embedded intelligence distributed throughout the grid will require more microprocessors to analyze information at transformers, substations, and the in-home energy management devices that will control home appliances.

Smart Power
Bazmi Husain, head of the smart grid for ABB Worldwide, a division of ABB Ltd., expects more significant cost savings to come from greater automation to manage power lines, reducing the need for manual work. Husain sees grid modernization and the convergence of power and automation as major sources of future growth. ABB’s network-management systems enable the utility to monitor conditions for each of its devices on distribution lines and control them if something goes wrong.

ABB is also making equity investments in smart-grid infrastructure companies such as California-based Trilliant and developing grid-scale energy storage systems, including the world’s largest in Fairbanks, Alaska. In May, it acquired Ventyx Inc., which provides software to help utilities better manage equipment and employees.

Capgemini’s Roehr says a more realistic goal than saving ratepayers money is handling additional energy demand, with electric vehicles likely the most disruptive factor. With a transformer for every three or four houses, “if two or three of them plug in their electric vehicles at 5:30, they’ll kill the transformer and kill the circuit,” he says.

The hope is that building out the smart grid won’t add costs for consumers. “That will be a challenge,” Roehr says.

Cisco Systems will be making a major announcement Tuesday that the technology company says “will forever change the Internet.” But could this new announcement include an AppleTV-like set-top box that does everything?

Exactly what Cisco will be announcing is still under wraps, but some folks are speculating that the announcement will include several products that will provide a grand vision of Cisco’s end to end vision of the Internet that will include new infrastructure products as well as new consumer devices for the home.

One of the products that could be announced is an AppleTV-like cable set top based on technology from Scientific Atlanta, according to the blog SiliconAngle. Cisco bought Scientific Atlanta four years ago and it has been selling the company’s set-top boxes to cable companies. But it has yet to use the platform to launch a consumer product line.

According to the SiliconAngle blog, this new box supposedly will “do it all.” It will combine digital video recorder functionality found in a Tivo, video streaming from the Web, Internet access, wireless connectivity, and telepresence. It will also have massive amounts of storage for home media.

Cisco has already talked about testing telepresence in the home. Currently, the company sells a very high-end video conferencing telepresence system to large companies.

“It makes sense,” said Zeus Kerravala, a senior vice president at Yankee Group. “Cisco must have bought Scientific Atlanta for some reason other than traditional set top box market. And it’s tangential to the router/switch business.”

Other components of the announcement could include a partnership with service providers for ultra high speed access to the home and 100 Gigabit Ethernet on some new routers. Cisco will likely wrap all these products and announcements into a grand vision of how it sees the future of the Internet.

Cisco has been hyping the event, which starts at 8 a.m. PST Tuesday morning, for a couple of weeks. It sent notices to reporters and analysts inviting them to view a Web presentation about a “significant announcement” that it claims “will forever change the Internet and its impact on consumers, businesses and governments.”

Initially, blogs buzzed about Cisco possibly announcing a super-fast fiber network to test ultra fast broadband technologies. Google had announced plans to build its ultra-high speed fiber test bed the same week Cisco sent out the media advisory.

But Cisco has quieted those rumors by stating that the company’s strategy remains to partner with carriers. It’s not looking to compete against them.

Others have speculated the new announcement might also include products that will help wireless operators upgrade their networks to 4G wireless technology. Cisco, which has traditionally provided wired infrastructure to Internet service providers, recently bought a company called Starent Networks that helps wireless operators connect their wireless networks to the wired Internet.

The purchase was important for Cisco because it gave the company technology it was missing. Before its Starent acquisition, Cisco was unable to offer an end to end solution to wireless operators. But it’s competitors could. For example, competitors Alcatel Lucent and Ericsson already provide similar wireless Internet access infrastructure gear that Cisco got from Starent, as well as equipment that Cisco has traditionally offered Internet services providers. Now with the Starent gear, Cisco can compete head-to-head with these rivals on an end-to-end basis.

“The timing is right for Cisco to make a big wireless platform announcement,” Kerravala said.

But are any of these announcements truly going to change the Internet forever? Probably not.

“I can’t imagine any of these new products or announcements having that kind of impact,” Kerravala said. “That’s a bold statement. But I think Cisco is trying to gain mindshare in the consumer network and wireless markets. So this is likely the hype cycle they’ve created to do that.”

Dec. 8 (Bloomberg) — Cisco Systems Inc. Chief Executive Officer John Chambers said the company has “little interest” in selling its own smart phone, though it sees partnerships in that industry as a way to boost network demand.

Chambers said he is focused on working with Research In Motion Ltd., Apple Inc. and Palm Inc. to handle the networking required by smart phones, which are used to surf the Internet and download applications. The remarks signaled that Cisco wasn’t in the market to acquire a smart-phone maker.

“We love anybody who loads up networks, and smart phones do,” Chambers said today in an interview. “I see RIM, Apple and Palm as companies to partner with to help sell networks. I think they see us the same way.”

Cisco, the world’s biggest maker of networking equipment, acquired the maker of the Flip camcorder this year, pushing into handheld consumer electronics. That decision wasn’t about acquiring a device — it was more about getting technology that spurred the use of related software and networking, Chambers said today. The Flip plugs directly into computers’ USB drives, making it easier for users to share video over the Internet.

“I have very little interest in phones,” Chambers said in the interview, held during the company’s analyst day at its headquarters in San Jose, California.

While Cisco may not be interested in the smart-phone market now, the Flip business will face increasing competition from those devices, said Shaw Wu, an analyst with Kaufman Brothers in San Francisco. Apple’s iPhone already has camcorder features and other devices are adding those capabilities.

“In the near term, they probably don’t need to be in the market, but longer term, they may have to,” Wu said in an e- mail. “Their Flip camera business could come under pressure as that functionality gets incorporated into smart phones.”

OSLO (Reuters) — Cisco Systems, the network equipment maker, said on Friday that it had control of more than 90 percent of the Norwegian videoconferencing company Tandberg, and will buy out remaining shareholders.

Cisco said it had 89.1 percent acceptance for its offer of 19 billion Norwegian crown or $3.4 billion in addition to 2 percent of Tandberg, or 2.2 million shares, that it bought in November.

Cisco struggled to win over Tandberg shareholders. Its original bid was rejected by over 90 percent of Tandberg shareholders, forcing Cisco to repeatedly extend its offer deadline and raise its bid by 10 percent last month.

The companies also said on Friday that the Department of Justice had made a request for additional information about the deal.

“Cisco intends to respond expeditiously to this request and continue to work cooperatively with the DOJ in connection with its review,” it said.