Cisco ramps up video strategy

The networking giant sees the explosion of online video as a chance to get a much-needed boost.

By TheStreet Staff Apr 11, 2011 10:42AM

Image: Network cable (© Epoxydude/Getty Images/Getty Images)By James Rogers, TheStreet


Cisco (CSCO) has added flesh to the bones of its video strategy, upgrading its flagship router technology and strengthening its relationship with telecom giant AT&T (T).


The networking giant sees the explosion of online video as a chance to get a much-needed boost for sales of its gear into service providers. Cisco told TheStreet that its CRS-3 router is leading this charge.


"With video becoming such a key driver of traffic, we're introducing a new feature within CRS-3 that will reduce costs dramatically," said Suraj Shetty, Cisco's vice president of worldwide service provider marketing.


The Flexible Packet Transport technology is a blade that fits into the CRS-3, and Cisco is pushing the offering as a way for telcos to streamline their networks. "It enables fast switching within the service provider network," Shetty explained. This "dramatically reduces the cost of transporting video across long distances, for example, from San Francisco to New York."

The blade could therefore reduce service providers' need for packet transport switches, according to Shetty, which are used to boost the speed of long-distance traffic.


Unveiled in a blaze of publicity last year, the ultrafast CRS-3 is touted by Cisco as the foundation for the next-generation Internet.


Shetty said that 80 service providers have already deployed the CRS-3 router, many of which are major names. AT&T, which began using the CRS-3 in a 100-Gigabit trial last year, is now using the router in a live production environment, he added.


"This is huge," said Shetty, explaining that AT&T's acceptance represents a big rubber stamp for the CRS-3. "It's one of the top-tier service providers in the world."


Cisco CEO John Chambers recently vowed to increase the company's video efforts as he attempts to turn the networking giant around after two tough quarters.


Cisco, which competes with Juniper (JNPR), Hewlett-Packard (HPQ) and Alcatel-Lucent (ALU), is certainly in the spotlight at the moment. Last week, in a memo to employees, the Cisco CEO acknowledged that the firm had disappointed its shareholders and admitted that it needs to execute better.


Weakness in the switching and consumer markets in particular, have impacted Cisco, forcing the company's shares down almost 13% this year.


The telecom market, however, could prove key in lifting Cisco out of its slump. Service providers account for almost a third of the company's revenue and the explosion in smartphones, tablets and other mobile devices is placing a big strain on networks.


Cisco, for example, expects to see IP traffic grow 30% a year over the next five years, two thirds of which will be video. "We're going to double-down in video," said Chambers, during a Wells Fargo technology conference last week. "I would watch our execution in video."


The CEO added that he feels good about the company's router lineup. "We're in very good shape, we're in a very good competitive position," he explained.

During its recent fiscal second quarter, Cisco's routing revenue grew 4% year-over-year to $1.7 billion while its switch sales slipped 7% to $3.2 billion.


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