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Cisco's John Chambers answers his critics: What premium pricing?

John Gallant, Scot Finnie and Eric Knorr | March 15, 2010
Cisco CEO John Chambers talks about what Ciscos competitors are saying about the company.

Well, that's a little bit unfair. Do we come down Moore's Law at tremendous speed? The answer is yes. As long as you do that, customers don't have a problem with you making a premium, because if you don't make a premium, you don't develop new products. You don't protect their investment. They've all been through that.

Do I believe there's a rapid industry consolidation taking place? Absolutely. Do I believe that part of the decision for who's going to win is based upon your innovation, based upon your ability to catch market transitions, based upon making your products play architecturally together, protecting the customers' investments, and an open architecture? Yes. Will customers pay a premium for that? Absolutely. But, I would argue it's not a premium. I'd say [it's about} your total cost of ownership vs. your productivity. It costs a lot less. Wal-Mart considers us at the very top of their partnerships. You would think that unlikely because they are one of the toughest in the world on cost. Yet, if you talk to the CEO or the CIO, they would say we're at the very top of the list. If I had told you two or three years ago BT would say we're their strategic business partner, not just technology partner, you'd have said unlikely. Yet, we are.

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If I were to have said the same thing about a GE… Are we tightly tied with the business group? Absolutely. Are we tightly tied with the CIO? Absolutely. Now the CEO? Yes. Does the CIO like us doing that? You betcha. So, it isn't a question of do you end run? In fact, if you didn't end run, that's usually a problem. The key is how you work toward common goals. Do we push the envelope on productivity? Yes, because I think any company that doesn't evolve their productivity, who doesn't move into new markets, regardless of industry, will get left behind. We are making people, at times, a little bit uncomfortable with how fast we move. This will surprise you: My mistakes have not been moving too fast. It's when I move too slowly in a market transition. Or, equally as bad, when I moved too fast without a process behind it.

 

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