Update: Cisco banks on 'quad play' for sustained growth

Cisco Systems Inc. Chief Executive Officer John Chambers Wednesday stoked the networking vendor's love affair with IT investors by pointing to the company's unified communications strategy and broad product portfolio as a way to sustain growth over the long term.

At the company's annual financial analyst conference in New York, executives said Cisco will sustain double-digit growth through the rest of the decade by incorporating data, voice, video and mobile capabilities -- what it calls its "quadruple play" -- across product lines, while addressing the service provider, enterprise, commercial and consumer markets.

The company will announce a video conferencing product in the next few months, and fine-tune quality control for VOIP and video across several router lines, executives said.

"Now if you’re the innovator and the leader it protects you from the startups and the advanced players," Chambers said.

Cisco expects to sustain a 10 percent to 15 percent compound annual revenue growth rate through the rest of the decade.

The company will be able to take advantage of the breakdown of barriers among vertical-market product lines, as consumers and professionals increasingly expect to get both corporate data and home and family information anytime, anywhere, Chambers said.

"The network becomes the platform," noted Chambers, in a frequently repeated phrase during the event.

At the corporate level, product integration is fueled by a trend in businesses to move from a "command control" style of management to a more collaborative model, he said.

"If you asked me a few years ago I would have said collaboration could account for maybe 10 percent to 20 percent productivity efficiency but now I would say that's closer to .... 30 percent to 50 percent," he said.

The company is banking on business uptake of video collaboration tools to boost network traffic and the need for new infrastructure. The quad play equipment and services Cisco offers will be taken up broadly, by smaller commercial companies as well as Fortune 500 businesses, Chambers said. As an example, he pointed out that a 12-store Subway food chain in Texas has already implemented a quad-play Cisco-based system, which uses video to reduce theft.

Cisco can also help companies innovate and transition to new technologies, noted Charlie Giancarlo, Cisco's chief development officer. Giancarlo said Cisco "reinvented the TDM PBX [time division multiplex public branch exchange] industry ... bringing it into the unified communications era" through VOIP (voice over Internet Protocol) gateways and other products and services.

In response to questions from attendees, Giancarlo said, "we will be introducing ... a very significant video product in the next few months." Though he declined to announce details, attendees said that they had been expecting the company to announce a high-end, enterprise video-conferencing product.

The big question for attendees was whether Cisco can sustain growth and product leadership. The company has had 21 straight quarters where it met or exceeded Thomson Financial analyst consensus expectations, noted Chief Financial Officer Dennis Powell. The company's share price has benefited, surging by about 25 percent over the last year, compared to about 5 percent growth for the Nasdaq exchange.