Editor’s Note: This post is part of SiliconANGLE’s “Predictions and Reflections” series. To view this year’s collection, click here. To participate, create an account or log into “TheANGLE” and request to join the group. –mrh / spa]

The other day I posted 2009 – Ken’s Year in Review and promised I’d follow up with this requisite annual blogger’s rite, my look ahead. There may be some bumps in the road and unexpected twists here, so hang on dear reader. Put your tray table in the upright and locked position, raise your seat back and make sure your seatbelt is securely fastened. I’ve never been particularly shy or softspoken about my look at the future, and I probably won’t be now.

Disclaimer: These are my opinions alone. They don’t necessarily reflect the opinions of any employer past or present, my lovely partner Sheryl, the companies named herein, or anyone else on the planet. Your opionions and mileage may vary widely. Cheap shot comments will be tossed into the abyss, but open conversation and debate is always welcome.

Early in 2009 I predicted it was going to be the year Cisco took a big black eye. I agree, that didn’t happen. Instead they’ve taken a light bruising all year long. 2009 was a year when Cisco excelled at absolutely nothing that mattered in the market in my view. They were vanilla custard and simply didn’t matter in the market. They got off easy, and in 2010 they won’t. I said a black eye in 2009. I’ll predict a savage beating in 2010, the likes of which they’ve never felt before. I bet you’re curious where, aren’t you?

First in unified communications and VoIP space. I’d say Cisco is going to get their lunch eaten by multiple players. The Cisco solution set is pretty decent (Call Manager and the like), although their phones are forgettable. It won’t matter. I think they’ll get beaten repeatedly by Lucent, Asterisk, Mitel, and others. Even IBM, yes IBM, will cause pain for Cisco. 2010 will be the year Cisco learns how much they don’t know about telecommunications. It will be a bitter pill to swallow.

They bought Pure Digital for the Flip and they’re about to get a bunch of hype for the new Flip with built-in WiFi. I give that buzz six weeks and then they’ll take a good old fashioned, bare knuckles ass whuppin from the likes of Kodak’s Zi8 and a handful of others. More importantly, the current generation of cameras built in to mobile phones, notably iPhone and Blackberry, are likely to shift up taking another huge bite out of the whole dedicated camera market.

Then there’s Cisco’s core business – switching and routing. Coupled with some repercussions of the recent Starent acquisition and Juniper getting serious about the market, I expect some big moves in this space. Juniper will play big and strong. The big dog, Cisco, is going to get rocked back on their heels in some major networking deals in 2010. People will start to think about other options more often before simply choosing Cisco.

Oh, and John Chambers, the Rupert Murdoch of networking, will finally move on. I’ve seen his leadership at Cisco as ineffective in recent years and I expect him to move on, flying off with his golden parachute.

Of course there’s Microsoft, the Gorgon with more snakes in its head than Medusa. (Yes, the irony of Gorgons being female is intentional, for a reason…read on). I expect more layoffs at MS. Significantly more. Microsoft is still a very fat company, with plenty of trimming to do. In 2010, I think they’ll do some in the right areas. They’ve missed the mark a time or two with cutbacks, and some course corrections will happen this year. OCS will do well, especially against Cisco. Momentum will gain there.

If Microsoft’s a gorgon, Google is a Chimera, breathing fire, part search engine, part cloud service, part telco, part alchemist. (Perhaps an interesting sidenote: The Chimera’s tail ended in a snake’s head. Something to consider.) Google has a multitude of businesses and a serious problem. They have huge opportunity, but some days I wonder if they have the nerve to go for it. Google’s an 800 pound gorilla who seems afraid to rock the boat. Rather, they telegrahp five years in advance that they’re thinking of rocking the boat. I think 2010 will be the year that changes. They have several segments in play right now.

irst there’s Google Wave. It’s hit the market with a soft thud, but it’s still in early beta. I think they gave too much hype to something that isn’t going to hit mainstream for at least five years. Then again,  recall when Gmail came out of beta. Wave has potential, but right now it’s simply the geek developers playground. Google Wave is a sandbox. I don’t expect it to be anything but a sandbox for quite some time to come. Until Wave is fully integrated with GoogleTalk, Gmail, GoogleDocs and the rest of the suite, it can only be a playground for geeks and developers, regardless of whether your company can make your own wave or not. Lots of lead time on this concept, so if you haven’t started, you’re not too late. If you have started, you’re way early.

Google Latitude, is an interesting concept. It’s one that I think Google will tie in to mapping at some point. It integrates with Google Maps today. The recent tracking option to remember where you’ve been is clearly a shot across the bow of the GPS market. That’s where Google seems to be headed. I don’t think they grasp the significance of presence, availability and location in one app or they’d have integrated with GoogleTalk. Missed opportunity, and they’ll probably continue to miss and fall behind in location based services in 2010. They’re big and powerful enough they can still recover over the course ot their standard half-decade development cycle, so don’t count them out. Just don’t expect them to deliver a solid LBS solution in 2010.

The biggest opportunity Google has is with Google Voice (formerly Grand Central), perhaps with some integration of the stuff they bought up with the Gizmo acquisition. There’s a problem here, and it’s a Google cultural barrier. They’ve got this “do no evil” image they’d like to protect. They don’t understand that when it comes to investors and profit, there are degrees of evil that your investors and customers will accept. They try, but sometimes a little evil slips into the mix. For Google to make a real play in telecommunications, they have to take the gloves off and get down and dirty in a biting, hair pulling, crotch kicking knife fight with some of the dirtiest fighters in history, the telephone companies. And Google is already the underdog in the eyes of the referees, legislators and the FCC. Because the referees are the cronies and lackeys of the incumbents. I only say that because it’s true, and after thirty years in the industry, I’m pretty sure I’m right.

And now for some highlights.

I think the hot acquisition of the year will be Voxeo, assuming they take the deal. It will be big. I think Voxeo’s worth significantly more than Twitter. I expect someone to make a play for Voxeo that’s well into significant nine figures. And it will be worth it. The deal of the decade for me? Call it a fantasy deal. Let Google step up to the 800 pound gorilla who wants to play hardball and buy Voxeo for $300M, integrate within 120 days and go live and strong with a significant telecommunications solution from top to bottom, enterprise to consumer. They could be the biggest telecom provider in the world in the space of a year if they pulled the right leadership team and strategy together. Will they? Let’s watch. I think not, but they could disrupt the telecom industry more than anyone in history. I’d like to see it. Voxeo’s a company I’d like to work for or with.

I’ve said a few times recently that location based services are on the rise. I think Foursquare is going to shake out as a big winner in the space. I recently wrote about Mainstreaming Location Based Servicesand I expect this white-hot market segment to heat up even more. Foursquare has a Blackberry app in development, with some early beta testers. Sheryl and I aren’t among them, but I’m reaching out to the Foursquare team with some ideas. Suggestions to some startups fall on deaf ears. I don’t think that will be the case at Foursquare. They’re riding on popularity and buzz, not ego. These three guys are going to be very rich, and I think by year-end 2010 they’ll own the LBS space and be growing even stronger. If they make the right moves, Foursquare will be sneaking into mainstream and business use by the end of 2010 and somebody will be looking to acquire Foursquare for a substantial chunk of change. Foursquare is another company I’d like to work with.

I’d like to predict some excitement in the mobile space, but I don’t see it on the horizon. I think there may be another iteration of the iPhone. Rumors are floating. I think it will be an incremental update. I think RIM will continue incrementally updating the Blackberry without a major win in consumer space. I think Nokia will release at least 52 new phones next year, one for each each week, but not blockbuster hits. And the droids still won’t be the ones we’re looking for at the end of 2010 in my view. Oh, and Windows Mobile will still make us WinCE in pain, although I expect Microsoft will try to do something to link it more tightly to Windows 7.

In the industry analyst space, I expect to see a couple of the major firms have less-than-notable years. I think Forrester and Gartner will both have a bit of a rough time. Conversely, I think Frost and Sullivan will have a banner year. I also think it’s going to be a year for independent analysts. Those of us who do this out of passion for the industry, without personal or financial bias, will find ourselves winning more often. That’s good news. I expect some significant highlights here actually.

The Language of 2010
We’ll see some terminology shift in 2010. Just as Gartner removed unified communications from their list of hot topics for 2010, I think we’ll see that phrase start to fade. Unified communications, Software Oriented Architecture (SOA), Software as a Services (SaaS) Communications Enhanced Business Processes (CEBP) and mashup (blech!) all need to fade and be replaced by real expectations (market demand for solutions that work instead of buzzwords). I think we’ll see that start to happen.

Social media is one of the most abused, misused, inaccurate terms ever coined. Most of what we see is social marketing, not social media. In 2010 we’ll see more social, less media. More marketing with marketers starting to call it what it is. They all want the hype, spin and buzz. There will, unfortunately be more chaff, but there will be more meat. As reputable firms beging to figure it out, there will be more overall goodness in this space. But there will be more stupidity too.

In 2010, real expertise will win out and the independent advisors will get some real recognition as the mouthpieces and tools in the industry get noticed for what they are. For example, Sheryl coined the phrase engagement specialist almost two years ago. She and I have talked about the criticality of reciprocity and engagement for a long time. That isn’t fluff any more, and as we survey independent advisors, the value they bring to business is being seen. Businesses understand that old school, whether it’s marketing, PR, mailing lists (spam) or marcoms simply isn’t effective in the world of NOW media.

I think that’s enough, and I didn’t even get started on traditional media. So as a parting shot for this long post, traditional media will continue to decline, but journalism, real journalism will rise in both visibility and integrity. And people like Rupert Murdoch will be the catalysts in the slide of traditional media into the abyss of the dead media pool.

Want more? Drop me a note, leave a comment or send me a tweet.

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Cisco, EMC and VMware announced Tuesday a joint venture to sell a new integrated data center product called V-Block.

Their venture, called the “Virtual Computing Environment coalition,” will sell and provide maintenance and service support for V-Block, and will combine EMC storage equipment, Cisco virtualized servers and networking equipment and VMWare virtualization technology.

Rumors of the deal — code-named “Alpine” — have been going around since September.

The companies say their coalition offers businesses “dramatic efficiencies” promising “significant reductions” in capital and operating expenses, without forcing organizations’ hands to choose between the companies.

The companies are selling Vblock Infrastructure Packages as “fully integrated, tested, validated, and ready-to-go/ready-to-grow infrastructure packages” that can scale. Together, the venture offers unified presales, services and support.

Citing McKinsey and Company figures that worldwide spending on datacenter infrastructure and services exceeds $350 billion annually — half on capital expenses and half on operating expenses — the companies say $85 billion, or 20 percent of the entire market, can be addressed with virtualization and private cloud technology by 2015.

Cisco and EMC currently have a partnership to collaborate around Cisco’s new data center platform, which the company calls “Unified Computing.” EMC owns almost 85 percent of VMWare.

Cisco and EMC also announced on Tuesday a joint venture called Acadia to build, sell and support products for corporate datacenters. The goal? “Accelerating customer build-outs of private cloud infrastructures through an end-to-end enablement of service providers and large enterprise customers.”

The targets? HP and IBM.

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SAN FRANCISCO — Cisco Systems Inc. doesn’t want Wall Street to interpret its forecast for its first quarterly revenue growth in a year as evidence that the U.S. and other economies are roaring back.

A slow improvement in orders is under way but the pace is still slow and the recovery is fragile, executives from the world’s No. 1 maker of computer-networking equipment told analysts Wednesday.

Cisco forecast that revenue will grow 1 percent to 4 percent in the current quarter, which ends in January. That would translate to revenue of $9.2 billion to $9.5 billion. Analysts polled by Thomson Reuters were expecting a decline from last year.

Cisco’s results are seen as a gauge of how large corporations and government agencies and Internet providers are managing their technology budgets. Rising sales suggests they are loosening the pursestrings to buy Cisco mainstays such as routers and switches, which direct data traffic.

Cisco’s CEO, John Chambers, said orders are rising again after passing a “tipping point” in the downturn this summer.

Cisco executives urged caution, though, saying sales could still sputter if the economic recovery wobbles.

“There’s still uncertainty in the economy on a global basis,” Cisco’s chief financial officer, Frank Calderoni, said in an interview. “It’s not completely back to normal levels, and with that kind of uncertainty, you really have to take things quarter by quarter.”

Cisco’s numbers for the fiscal quarter ended Oct. 24 indicate that the company is still suffering from the downturn, which has forced its biggest customers to rein in spending, but is seeing green shoots that pleased investors.

Cisco’s net income dropped 19 percent to $1.8 billion, or 30 cents per share. Excluding one-time charges, Cisco earned 36 cents per share. Revenue fell 13 percent to $9 billion.

Wall Street was expecting even steeper declines, though. Cisco’s shares climbed 82 cents, or 3.5 percent, to $24.11 in extended trading. In regular trading earlier, it gained 31 cents, or 1.4 percent, to close at $23.22.

Given the brightening conditions, Cisco it will start to hire more employees after laying off workers over the past year. Cisco’s work force has shrunk by about 3,500 over the past four quarters to about 63,800, mostly from layoffs but also from early retirement offers and attrition.

Chambers said the hiring will be “very targeted” and focused on new markets.

San Jose, Calif.-based Cisco also announced that its board approved $10 billion more for stock buybacks, lifting the total amount available under that and previous plans to $13.1 billion.

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In a direct challenge to computer giants IBM Corp. and Hewlett-Packard Co., data storage firm EMC Corp. of Hopkinton has allied with Cisco Systems Inc., the world’s leading computer networking company.

In a joint venture, EMC, its majority-owned subsidiary VMware Inc., and Cisco will sell prefabricated business computer systems. The new products will be built with computer servers from Cisco, data storage hardware and software from EMC, and server management software from VMware. “Wherever you touch any one of the three of us, we will look like one company,’’ said Cisco chief executive John Chambers.

Cisco, long known for its equipment used in computer networks, this year started making servers, large computers that store and process information. IBM and HP are the industry leaders when it comes to selling computer servers to businesses. By joining forces, EMC and Cisco can expand into that market quickly, offering integrated systems built with technology from both.

“Basically we are removing risk,’’ said EMC chief executive Joe Tucci. “This is all about efficiency, control and choice.’’

The integrated systems, called VBlock Infrastructure Packages, will allow customers to buy all the equipment and software they need together, from one seller. Big businesses use data centers – large arrays of computers and storage gear – that are often cobbled together with products from various vendors, and are difficult to manage. EMC and Cisco will offer systems that would allow customers to install new software or manage company information from a single control center.

Tucci said VBlock would transform the company’s data center into a “private cloud,’’ similar to the cloud computing services found on the Internet, where users run software that is stored online instead of on their own desktops. In companies with a private cloud, computing and storage resources would be centrally managed and easily accessed by workers in various departments.

The alliance could be a major boost to Cisco’s effort to expand beyond the networking equipment business. Earlier this year, Cisco launched the Unified Computing System, a new line of server computers. This put Cisco in competition against industry titans IBM and HP, which sell integrated computers and storage products. EMC and VMware are dominant players in storage and server virtualization, technology that allows many computers to run together as efficiently as one machine, but can’t match IBM and HP in servers or Cisco in networking.

Mark Bowker, senior analyst at Enterprise Strategy Group in Milford, said the new coalition will let the three companies offer customers one-stop shopping – a fully-integrated package that they could not offer on their own. “They’ve taken server, networking, and storage and put them together into a single unit,’’ Bowker said.

EMC and Cisco also announced a joint venture called Acadia, which will build and manage VBlock data centers. Acadia workers would oversee the installation of VBlock systems and train employees to operate them. VMware and chip maker Intel Corp. are investors in the Acadia joint venture.

EMC shares rose 12 cents yesterday to close at $16.55 on the New York Stock Exchange. Cisco fell 9 cents to $22.91 on the Nasdaq exchange.

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It may surprise you that Cisco routers run many services by default that could create vulnerabilities. The services below are enabled by default and should be disabled if not in use.

BOOTP server allows a router to act as a BOOTP server for other routers; thereby allowing them to load their operating system over the network from the router acting as the BOOTP server. A hacker could use the BOOTP service to download a copy of the router’s IOS software.

Cisco Discovery Protocol (CDP) is used to obtain information about directly connected Cisco neighbors. The information gleaned from CDP includes ip addresses, hardware model information, and operating system version. This feature could allow a hacker to gain information about the configuration of the device and of the network infrastructure.

However, CDP needs to be enabled when using Cisco IP phones. If it has been disabled globally on the switch, it can be enabled on the interface using the cdp enable command. There are several known attacks on the Cisco IP Phone CDP feature, so each network administrator must weigh the risk versus the benefits.

HTTP Configuration and Monitoring allows the router to be monitored or configured from a web browser. HTTP is a clear-text protocol and is vulnerable to various packet-capture methods. A hacker could monitor network traffic and capture authentication usernames and passwords.

This issue is made more serious when the enable password is used for authentication, because this knowledge would give the attacker full administrative access to the device. Once usernames and passwords have been captured, it is simply a matter of using the credentials to log into the router.

If web access to the device is required, consider using HTTPS or Secure Shell (SSH).

Internet Control Message Protocol (ICMP) Redirects cause the router to send ICMP redirect messages whenever the router is forced to resend a packet through the same interface on which it was received. By sending ICMP redirects, a hacker can redirect packets to an untrusted device.

IP Source Routing lets a network packet specify how it should be routed through the network. A hacker could specify a route for a network packet to follow, possibly bypassing a Firewall or an Intrusion Detection System (IDS). A hacker could also use source routing to capture network traffic by routing it through a system they control.

A hacker would have to control either a routing device or an end point device in order to modify a packets route through the network. However, tools are available on the Internet that would allow a hacker to specify source routes.

Finger Service allows a hacker to find out who is logged into the router and  to find valid login names. The information they could access includes the processes running on the system, the line number, connection name, idle time, and terminal location. Unauthorized persons can use this information for reconnaissance attacks.

Proxy ARP configures the router to act as a proxy for Layer 2 address resolution when hosts have no default gateway configured. When a host sends an ARP, the router responds to it with its own mac address as the one to use for the remote system. Attackers may be able to spoof packets and gather information about your router and your network.

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One of the rumors floating around this week is that EMC Corp. and Cisco Systems will create a joint venture focused on enterprise data centers. This report began circulating last week, when The Register said the two tech titans would team ”to market a jointly developed product.” The JV would not include VMware, the report said.

The story has spread far and wide today after a Wall Street Journal writeup. ”Code-named Alpine, the venture would be aimed at data centers – the giant computing rooms that power the Internet and corporate networks – say people briefed on the effort,” Ben Worthen writes. “It would specialize in installing systems that combine a new server Cisco recently started selling with Cisco networking gear and EMC storage systems, these people say.”

EMC and VMware have been crucial partners as Cisco has rolled out its Data Center 3.0 vision and Unified Computing System switches and servers. This has triggered recurring rumors that Cisco might use its huge cash hoard to acquire VMware of even all of EMC.

The latest speculation focuses on the fact that UCS doesn’t have a built-in storage component. The Register noted the possibility of offering customers unified support – a “single throat to choke.” The Journal suggests that Cisco’s entry into the server market has soured relations with IBM and HP, forcing it to turn to EMC for sales help. Network World theorizes that if a joint venture succeeds, it could then be acquired by Cisco.

We’ve heard from the technology press. What do you think? What advantages might a Cisco-EMC joint venture offer that can’t be realized by their current partnership? Share your insights and theories in the comments.

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Cisco Systems(CSCO) continues to fill out its vision for the converged data center of the future. While Cisco’s new blade server is a key part of its ambitions, the company is also offering a way for other server vendors to plug their blades into unified fabrics powered by Cisco networking gear.

Today the networking giant is announcing the Nexus 4000, a blade switch that integrates with blade server enclosures, including non-Cisco blade chassis. Cisco’s introduction of its B-Series “Project California” blade server raised expectations of tensions with long-time partners IBM and HP. Cisco isn’t yet identifying which server vendors will embrace the Nexus 4000, leaving those future announcements to its partners.

Nexus Blade Switch
The Nexus 4000 blade switch supports the NX-OS operating system that is central to its “Data Center 3.0″ vision for a converged data enter network that allows server and storage networks to connect seamlessly.

A unified network fabric offers the potential to reduce the number of interface connections to the server level, eliminating the need for separate connections for Ethernet and Fibre Channel, a protocol that is widely used in storage area networks (SANs). This would result in fewer cables, adapters and switches, which in turn would reduce power consumption.

Cisco says the Nexus 4000 will allow users to consolidate switches, eliminating the need to have both an Ethernet and Fiber Channel switches to connect blade infrastructure to the LAN and storage networks. The 4000 can connect with the Nexus 5000 and 7000 switches as well as Cisco’s MDS line of Fiber Channel switches for storage area networks

Upgrade Path to 10 GB Ethernet
Ranjeet Sudan, Cisco senior product manager for its blade switch line, said the Nexus 4000 will figure in the plans of companies upgrading their networks from 1 Gigabit Ethernet to 10 Gigabit. ”It can be used for an existing buildout, but most customers will do so as part of a refresh,” said Sudan.

The Nexus 4000 will support Converged Enhanced Ethernet (CEE), the new standard for Ethernet with reduced packet loss, a key feature in supporting storage traffic. A key part of Cisco’s approach to next-generation networking is using Fiber Channel over Ethernet (CFoE) and CEE as a platform for unifying Fiber Channel SANs with the LAN.

Committed to MDS
Cisco’s advancement of FCoE has raised questions in some quarters about its commitment to its MDS line. “There’s a lot of FUD being spread out there that the MDS is going away,” said Bob Nusbaum, product line manager for Cisco’s SAN switches. “The MDS is not going away.”

Today Cisco will outline its roadmap for the MDS and its “evolutionary” path to a unified fabric, with the NX-OS operating system providing management capabilities for multi-protocol storage networking. The announcements will be outlined in a live Internet broadcast at 10 am Pacific time.

No More “Data Center Ethernet”
Nusbaum said Cisco’s approach will support FICON, NAS/iSCSCI and Fiber Channel over IP, in addition to FCoE and CEE. ”Our unified fabric is not just FCoE, but unifying all these protocols,” he said.

Some of the terminology around converged networking is starting to unify as well. Cisco initially used the term “Data Center Ethernet” instead of CEE or “Data Center Bridging” (the IEEE language), which ruffled some feathers because Cisco had trademarked the term. Nusbaum says Cisco will now use CEE or Data Center Bridging.

“We thought it was simple way to describe it,” Nusbaum said of Data Center Ethernet. “But it was causing confusion.”

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Campion Insurance Group, which was established in 1984 from a single office in Urlingford, Co Kilkenny, has evolved to become one of Ireland’s most modern and innovative commercial and personal lines brokers with a staff of more than 100 people and offices in 11 locations around the country.

Campion Insurance has implemented a disaster recovery solution and IT infrastructure upgrade in order to keep pace with the company’s expansion, reduce business risk, deliver high availability and be better prepared for disaster recovery.

“We plan for continued growth and improved customer satisfaction and that increased the pressure to standardise and upgrade our operating platform and IT infrastructure,” explained Stephen Breen, IT manager at Campion Insurance.

“We also wanted a disaster recovery solution to reduce business risk, deliver high availability and be better prepared for disaster recovery,” Breen added.

Datapac was appointed to optimise the business and to provide consultation, installation, implementation, training and on-going support services.

Datapac implemented a solution that links all their offices through an Eircom BIP network via Cisco routers. This has allowed Campion’s to centralise and publish all their critical business applications using Citrix from a central site to all their branch offices.

Campion Insurance can now distribute all services to any location, as well as to their disaster recovery centre in Dublin. This structure has also allowed for ease of business growth and systems support.

Due to Campion’s considerable expansion, Datapac implemented a new Windows Active Directory domain and MS Exchange services to cater for current and further expansion. This has created an integrated and reliable platform that is more easily managed by Campion and increased efficiency for their customer services representatives.

Datapac worked with the company to integrate its DR infrastructure into Campion’s data network by utilising the BIP Wide Area Network.

Campion Insurance can now host virtual replicas of their live environment using technology from VMWare, HP, Microsoft and Citrix. This provides the infrastructure to allow online replication for Campions’ email, file servers and critical applications by mirroring them to a hot site location based in Dublin.

Datapac also implemented Double-Take which, each night, provides an incremental backup for the system state of the remaining servers and rebuilds an updated image of the same in the hot site.

“We have centralised everything, so from a management point of view, it’s all in one place with the security and anti-virus protection that we need,” Breen explained.

“We now have real-time online replication with regard to our email and applications and this allows us to respond quickly in the event of any failure or disaster,” Breen said.

The next phase for Campion Insurance will be to link the phone systems into the BIP network and introduce voice over IP.

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JOHN CHAMBERS no longer travels much. That is not for want of energy, of which the boss of Cisco Systems has plenty. It is because he is a proud and enthusiastic user of his own company’s technology. Since 2006 Cisco has been selling a system called TelePresence (pictured above, with Mr Chambers holding forth), which turns awkward videoconferences into pretty lifelike encounters. He pulls all-nighters to talk to customers and colleagues in Europe and Asia.

Meet Mr Chambers in the flesh, and the small talk lasts for about five seconds, until he asks: “What do you expect from this conversation?” If he seems to have no time to waste, no wonder. He does not only have a huge company to run, but he is also reshaping it.

During the dotcom boom Cisco was hailed as the leading light of the “new economy”, being the supplier of most of the gear guiding data through the internet. In early 2000, when its market capitalisation peaked at nearly $550 billion, it was briefly the world’s most valuable company. But a year later, like other technology giants, it was hit by what Mr Chambers calls the “hundred-year flood”. Cisco did not drown, but much of its stockmarket value was swept away (see chart 1). Since then it has been regarded for the most part as a lowly network plumber: necessary, but dull.

The company has not been immune from the world’s latest bout of economic troubles. In the quarter that ended in July its profit, $1.1 billion, was 45% lower than a year before. But Cisco, which had revenues of $36 billion in its latest financial year and employs more than 66,000 people, has been making headlines again for different reasons as well. “Cisco plans big push into server market,” read one in January. Another, in March, declared: “Cisco pushes further into consumer territory.” More recently a third said: “Cisco: smart grid will eclipse the size of internet.”

In other words, the plumber is branching out. As well as making these unexpected forays away from selling network gear, Cisco is exploring other sidelines. From “virtual health care” to “cloud computing” and “safety and security” to “routers in space”, the company is tackling more than 30 “market adjacencies”, as new areas of growth are called in the corporate argot. Mr Chambers expects to keep adding more. He hopes that at least half will be successful and generate 25% of Cisco’s revenues within five to ten years.

Some on Wall Street worry that Mr Chambers, who has been Cisco’s boss for 14 years, is stretching his company so thinly that it could be ripped apart. Mr Chambers, not surprisingly, sees the expansion, seemingly in all directions at once, differently: as a bold attempt to achieve two things. He wants Cisco to become the main supplier of the essential elements of an increasingly connected economy, and to be a shining corporate example of how to use them. It should provide not only the tools of the company of the future, but also its organisational model.

Even at the height of the dotcom boom, people had only the vaguest grasp of Cisco’s business. Its physical incarnation was easy to picture: hardware such as routers and switches, which direct traffic through a network. But Cisco also made a lot of money from services, for instance by helping customers to maintain those networks. It was always a software firm as well, providing the dominating operating system for internet-type corporate networks. This mixture goes a long way towards Cisco’s dominance in the networking market and its high gross margins (64% in the most recent quarter): firms have continued buying Cisco gear not least because it works best with IOS (originally Internetwork Operating System), as the software is called.

Cisco also has a record of being willing to reorganise itself. It was an early outsourcer of manufacturing, for instance. Many of its products are never touched by a Cisco employee, but built by a contract manufacturer, tested remotely and then shipped directly to the customer. Cisco was also one of the first big IT companies to let others do much of its R&D. To plug holes in its product portfolio or react to market demand, it bought dozens of other networking firms and perfected the difficult process of integrating them.

The once-a-century flood, however, did not just wash away nearly a third of Cisco’s revenues in a single quarter. It also laid bare the limits of the firm’s business model. Its core markets, routing and switching, had matured: they would never again boast the annual average growth rates of more than 50% that drove Cisco’s revenues from $1.2 billion in 1994 to $18.9 billion in 2002. The firm was also running up against the law of large numbers, which makes it more difficult for big companies to grow rapidly. And however efficient the supply chain, networking gear is bound to become a commodity eventually.

The obvious remedy was to move quickly into new businesses promising more value. Some companies would have begun gently, with one or two; Cisco went for half a dozen, including optical networks, wireless equipment and internet telephony. Today these “advanced technologies”, as they are called internally, bring in 25% of Cisco’s revenues (see chart 2). This branching out has been institutionalised and expanded. Hence the 30 market adjacencies.

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A panel of cloud computing experts and industry executives shared their thoughts on the direction of the cloud market Wednesday in San Francisco.

The panel discussed points of contention in the market, such as the true definition of cloud computing and the future of both web-based clouds and on-site ‘private cloud’ systems in which the host system is owned and maintained by the client enterprise.

Panelist Joe Weinman, head of strategy and business development for AT&T Business Solutions, argued that the notion of a ‘private cloud’ made about as much sense as a ‘personal hotel’ but said that the underlying components of the idea, such as virtualization and in-house management would remain vital to enterprise IT.

“A lot of people like to say that whatever the question is, the answer is always cloud computing,” he said.

“We have to recognize that there is a lot of value to the hybrid solutions, the enterprise data centre is not going away.”

In other areas, however, the panel saw a very bright future for cloud computing. Panelists Timothy Chou of Ming Holdings and James Urquhart of Cisco both noted that hosted platforms were lowering the cost of development and allowing for the creation of specialized enterprise apps, benefitting smaller developers and start-ups.

“I hear the term ‘boot straps’ being thrown around in the start-up world now more than ever,” said Urquhart.

“The thing that will drive the long tail is the fact that any two kids out of college can go out with a really good idea, crank out some code and have the capital and resources at a price range and cash flow model that really works for getting a business started.”

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