New Log, New Direction. Check it out:
(SinoCast China IT Week Via Thomson Dialog NewsEdge) SHENZHEN, September 22, 2006, SinoCast -- CISCO Systems will increase investment in its Shanghai research center, where it is working on consumer-oriented products such as network DVD players and Internet-protocol TV equipment, the company's chief development officer said yesterday in the city.
Within the next year, the US-based router giant will invest almost USD 4 billion on research and development, mainly in its five research centers worldwide, including the Shanghai operation. Cisco plans to double staff to 500 at the local center by the middle of next year.
In the future, Cisco's Shanghai center, founded in 2005 with an investment of USD 32 million, will hire more than 1,000 engineers, about 10 percent of the company's global total for researchers, said Charles Giancarlo, Cisco's chief development officer, without providing a specific timetable.
Cisco's local center is now working on new technologies, from voice over Internet protocol to IPTV and network DVD devices that play computer-stored videos on TV screens through wireless connections.
"We have strong technologies for Internet protocol," Giancarlo said in an interview at the center. Cisco will launch a new marketing campaign next month to target end users, including changing its logo, Giancarlo said, declining to elaborate.
"The competition in the enterprise router market is heated, and Cisco, though still No. 1, is losing market share to rivals in China," said Zhang Tao, an analyst at Beijing-based CCID Consulting, a research firm under the Ministry of Information Industry.
As such, Cisco is forced to find other business opportunities, such as the promising consumer market, Zhang said.
"The key point (in assessing the consumer sector) is price, and Cisco has to cut costs on management and talent," Zhang said.
Cisco announced on May 10 the launch of an IT services company in Beijing, capital of People's Republic of China.
The U.S. company set up its research and development center in Shanghai last October, aiming at expanding market share in China.
U.S. market investigation company International Data Corporation predicted that until 2009, China's IT services market would grow at 18.5 percent annually to USD 11.6 billion.
China had become one of Cisco's key markets with a high growth rate and the new company would meet customer demand, Pinto said.
The new services company is based on the former service department of Cisco China and would mainly provide consulting services and technical support.
The level of investment in the new company has not been disclosed, but general manger James Kuo said more money would go into services in China.
"We expect double service revenue for Cisco in the coming two or three years," said Kuo. Cisco has five other services companies in the United States, Japan, Australia, Canada and India.
The companies were all set up in areas with great potential for IT services growth, said Pinto. Services accounted for 17 percent of Cisco's global sales revenue of USD 24.8 billion in the 2005 fiscal year.
Cisco Systems' revenue in its fiscal third quarter was USD 7.3 billion, up from USD 6.2 billion in last year's third quarter, as the company's business grew in the U.S. and other emerging markets like China.
Net income was USD 1.4 billion or USD 0.22 per share, including a stock-based compensation expense that the company did not include last year. With that expense applied to the results from a year earlier, Cisco would have reported net income of USD 1.2 billion or USD 0.18 per share, the company said.
Copyright 2006 Sinocast
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