(3 of 3)
All of which helps explain how Cisco got here. But will it continue to grow at a 50% annual rate? It took just 10 years for Cisco to go from start-up level to most valuable company in the world. That alone is a commentary on the pace of change in today's economy. The Internet has grown from a $5 billion business five years ago to a $500 billion one today, with annual growth rates of 50%. And in some sense, Cisco is the beneficiary of a virtuous cycle, so to speak, in which the very innovations that make its own products faster and increase the supply of bandwidth also supercharge demand for bandwidth, as faster computers mean we will want to download more video, more music and more of everything--all through Cisco-powered networks. "The user is the slowest link in the chain," says Varian. "We're limited by our biological perception--we can only read so fast, music only makes sense at a certain speed. But in terms of computers and routers, they can handle any speed."
Chambers likes to talk in terms of dog years. One human year is equal to seven Internet years. Even the folks at Cisco admit that in this technological revolution they will have to maintain a state of perfect paranoia to stay ahead. Cisco is facing tough competition in the telecom-equipment business, where longtime powerhouses Lucent and Nortel enjoy established expertise and relationships with key customers. "It's one thing to build a network the size of a corporation," says a skeptic, Nortel ceo John Roth, "but it's another to build one the scale of a whole nation."
The big prize awaits the dominant player in the voice-over IP business, in which voice is transmitted the same way as data--via the Net. Stealing a march on the competition, Cisco on Monday unveiled a new IP telephone that will allow corporations to use their data backbones for voice communication. Wireless networks loom as the next important phase of the Web. And then there's biotechnology, in which all these new systems are being applied to the natural sciences. And what about nanotechnology, with its tiny self-replicating machines? So, who will be the market-cap kings in 10 years? One thing you can be sure of--you haven't heard of them. Yet.