Cisco Systems (CSCO)

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Cisco CEO Pegs Internet of Things as $19 Trillion Market

By Olga Kharif Jan 8, 2014 12:01 AM ET 8 Comments Email Print

Cisco Systems Inc. Chief Executive Officer John Chambers said that the Internet of Everything -- connected products ranging from cars to household goods -- could be a $19 trillion opportunity.

In a keynote presentation yesterday at the International Consumer Electronics Show that also featured comedian Sarah Silverman, Chambers drew a picture of a world in which objects in homes, at airports, at hotels and elsewhere that are connected to the Internet know peoples’ preferences. That could lead to consumers buying more goods, he said. Such connectivity will have other ripple effects, including linked garbage cans reducing waste management costs by 30 percent, Chambers said at the giant technology trade show in Las Vegas.

“This is not about technology at all,” Chambers said. “It’s about how it changes peoples’ lives forever.”

Cisco is delving into the Internet of Things as it faces slowing sales in its networking-gear business. Revenue is projected by analysts to decline almost 5 percent in fiscal 2014, according to data compiled by Bloomberg. In December, the San Jose, California-based company cut its sales growth outlook for the next three to five years amid weaker demand from emerging markets and telecommunications service providers.

Connected Systems

Cisco last year formed a group to focus on the Internet of Everything, with projects including designing wristwatches for soldiers and centrally linking medical facilities and educational systems inside cities. With more devices coming online, Cisco is working to sell more networking equipment, as well as software and services.

“We think the Internet of Everything is the biggest transition for the Internet since the birth of the Internet,” Kip Compton, a senior vice president at Cisco, said in an interview.

The Internet of Everything could boost global corporate profits by 21 percent by 2022, Cisco said in slides prior to Chambers’s presentation. By 2020, 50 billion objects will be connected to the Internet, according to the slides.

CES Push

Cisco is making a big push at CES this year, even after it has shed many of its consumer-technology businesses. The world’s biggest maker of networking equipment has an exhibit on the main floor of the trade show this year for the first time. And Cisco has made several announcements, including a deal with Samsung Electronics Co. to offer Web conferencing capabilities on Galaxy devices, as well as a new cloud-based video service that lets service providers and media companies deliver video to consumers faster.

Cisco said it isn’t “re-entering the consumer business” with its activities at CES. Yet “CES 2014 provides an ideal venue for our executives to interact with key partners, customers and industry influencers,” said Jim Brady, a spokesman for Cisco.

Jayson Noland, an analyst at Robert W. Baird & Co., who has the equivalent of a buy rating on Cisco stock, said he was surprised by the company’s large presence at CES, “given Cisco’s de-emphasized consumer electronics over the last couple of years.”

To contact the reporter on this story: Olga Kharif in Portland at [e-mail]

To contact the editor responsible for this story: Pui-Wing Tam at [e-mail]
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http://www.bloomberg.com/news/2014-01-08/cisco-ceo-pegs-internet-of-things-as-19-trillion-market.html

Chambers positive??

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