There is something about Cisco, says "Fortune". Sure there is. Cisco is a company born out of the disruption that took place in the architecture of the ARPANET (the Internet’s primary network) which was previously based on point-to-point connection between mainframes and dumb terminals using telephone lines and modems. It was the change from this scenario to one where network traffic was sent in packets, that saw the birth of the router and Cisco. Since then, Cisco has come out of an initial phase of management-founders rift and a phase of mediocre existence to now lead the IP’s march to become the pervasive standard of all communications—data, voice, and video. In the process, it has left behind a pack of ex-competitors in the datacom industry to take its place in the sun as "the challenger" to some big oldies in the telecom infrastructure arena.

Financially, Cisco has performed like no other Internet company! It has grown from $1.2 billion in 1995 to $18.9 billion in fiscal 2000, an eighteen fold increase in the last five fiscals. With a market capitalization of over $250 billion, making it the fastest growing company in the history of technology industry, Cisco is the darling of Wall Street, despite worries on its outlook in markets like routers, where competition is gaining marketshare, and optical networking, in which the market leaders are likely to face a slowdown in infrastructure investment by telcos. Analysts still give Cisco a "Strong Buy—Aggressive" rating!

As one of the Internet’s first few children, Cisco has its beliefs firmly based on the Internet’s pervasive quality. It has its own ways of changing the communications infrastructure, enterprise, and the way we live. This company is a real big dreamer—and a good one at realizing its dreams.

Changing the Communications Infrastructure

Like it or not, the Internet has proved that mere connectivity is not what will be earning the service providers their profits. They will have to provide value-added services to make money. On the other hand, deregulation has encouraged many new players to enter the communications services market. And to add to the incumbents’ worries, cheaper technology acquisition costs and greater flexibility have quickly given the new greenfield operators a level playing field. These developments are driving both the new entrants and existing service providers to invest on infrastructure that are quite different from the existing telecommunication network.

The infrastructure that will be required for future communications services has to take into account that huge volumes of not only voice, but also data and video would travel through it. And, it has to be really fast in transporting these signals to make virtual reality a reality. The infrastructure has to be intelligent enough to be able to provide customized value-adds in addition to a range of useful services to customers. And finally, the customer should be comfortable using it.

Such an infrastructure involves huge investments. According to the Multimedia Telecommunications Association (MMTA), capital spending on telecom equipment for the US market touched $135 billion in 1999, growing at a rate of 11.5 percent. It also estimates that the rest of the world will spend $345 billion on telecom equipment by 2003. And this is just the start of a predictably long transitory phase.