Calderoni Interview Feeds Further Speculation on Cisco Smartphone

Over at CFO Magazine, they’re running an interview with Frank Calderoni, EVP and CFO at Cisco Systems.

You can peruse the interview in its entirety at the URL provided above.

One of Calderoni’s comments that caught my eye was his remark that Cisco’s “long-term business model anticipates annual revenue growth of 12% to 17%.” The interviewer, Edward Teach (no, not that Edward Teach), replies reasonably that those numbers seem ambitious for a company with revenue of $36 billion.

Calderoni replies as follows:

We feel confident that that’s the opportunity for us ahead. We mentioned the data center. Video is another area that we are very optimistic about. There has been a tremendous amount of growth in video usage, and that’s going to continue for a long time.

In other words, Cisco isn’t looking to achieve its ambitious objectives through incremental growth from its existing product portfolio in its existing enterprise and carrier markets. Instead, it will depend on new products and services in adjacent markets where Cisco currently is not a major presence.

Those comments set the stage for Calderoni’s discussion of consumer markets. Said the Cisco CFO:

The consumer is a key part of our strategy. Consumers are constantly driving video demand; they want the ability to access video anywhere, anytime, and on any device. Our consumer business, which today consists of our Linksys product line and Pure Digital and the Flip video camera, will give us the ability to leverage the network in the home or in business interchangeably.

Now consider Cisco’s Starent and pending Tandberg acquisitions, and give some thought to Cisco’s interest in making it possible for consumers to enjoy access to video “anywhere, anytime, and on any device.” Connect those dots to speculative reports of a Cisco smartphone, and suddenly that particular possibility seems neither speculative nor unlikely.

Mark Sue of RBC Capital Markets said earlier this year that a Cisco smartphone might reach market by the middle of 2010. That projection doesn’t seem farfetched in light of recent developments.

If Cisco moves in that direction, one wonders whether it will do so organically, through enhancements and extensions to its Pure Digital Flip mobile-video camera, or whether it will acquire a company already in the smartphone space.

Either option is possible. Regardless of how Cisco proceeds, we shouldn’t be surprised if the company barrels into the smartphone market within the next year.


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