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The IT industry is consolidating, says Cisco CEO

Caroline Baldwin

The IT industry is consolidating, and only the relevant players will be left standing, said Cisco’s CEO John Chambers.

“You're going to see a brutal consolidation of the IT industry,” he said.

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Speaking at the annual Cisco Live conference in San Francisco this week, Chambers said he had “seen this movie before”.

“Our peers of 15-20 years ago are all gone. Great companies, very, very good, but they missed market transitions,” he said.

Chambers said this trend is now accelerating again and pure hardware suppliers will be challenged by this. But players that provide hardware, software and other commodities, such as cloud services, will stand a better chance of survival.

“Out of the top five IT players moving forward, only two or three will be relevant five years from now,” he said. “And it isn’t a given that Cisco will be one of those – we have to change for that to occur.”

While Chambers did not outwardly state which companies would be likely to succumb to the “brutal consolidation”, he did point out that HP and IBM have not seen revenue growth for two to three years.

Out of the top five IT players, only two or three will be relevant five years from now. And it isn’t a given that Cisco will be one of those – we have to change for that to occur

John Chambers, Cisco

Meanwhile, Cisco’s latest results were not as bad as analysts had predicted. The networking giant reported a 5.5% fall in revenues and a 12% drop in net profits at the end of its third quarter, but the declines exceeded previous guidance and comfortably beat the market’s expectations.

One of the ways Cisco hopes to stay relevant in this changing landscape is by becoming more agile and predictive through its internet of things (IoT) technology.

“You need to take the right information at the right time to the right device and the right person to make the right decisions,” he said. “That’s difficult to do, and almost impossible without the architecture and technologies.”

Shell is one Cisco customer which is using the internet of everything (IoE) to change its business processes.

The company is leading the way in technology by being the first in the oil and gas industry to try out new technology through the IoE.

Alan Matula, executive vice-president and chief information officer at Shell, said that when drilling for shale gas, it must drill hundreds of wells at scale and speed, while preserving quality. 

Cisco provides the company with real-time remote monitoring capabilities, enabling information at the drilling point to be sent instantly back to the office for analysis.

“This is automation at the edge,” he said. “It can automate the drilling accuracy and speed.”

Matula said decisions about drilling are made at the edge, but remote command centres can quickly analyse the information at the drill site and even control the drill bits on the rig thanks to IoE technology.

Shell has also worked with Cisco to provide a comprehensive secure network infrastructure across the business. “Our critical infrastructure is incredibly important,” said Matula.


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