Cisco and Microsoft CEOs Share Vision for the Future of the Industry

NEW YORK – Aug. 20, 2007 — Participating in discussions today in New York, Cisco Chairman and CEO John Chambers and Microsoft CEO Steve Ballmer will share their views on the future of technology and discuss their plans to strengthen their collaboration to meet customer demands for improved interoperability between the network and software solutions that the two companies provide.

Today’s events include a discussion between Chambers and Ballmer, moderated by television interviewer and journalist Charlie Rose, and an executive roundtable where the two CEOs will sit down with CIOs from leading enterprise companies to better understand how Microsoft and Cisco can work together to help businesses succeed. As part of today’s discussions, the CEOs will talk about the four industry trends that customers are asking the two companies to address and they will highlight seven specific technology initiatives where Cisco and Microsoft will focus their efforts.

In a Q&A for PressPass and News@Cisco, the two CEOs discuss how Microsoft and Cisco are working together and how the two companies can collaborate in many areas, even as they compete in others.

Q: What will you discuss in New York? 

Ballmer: We’re two very competitive companies, and there tends to be a lot of media attention paid to how we are competing now or where we might compete head-to-head in the future. When so much of the focus is on who is going to win in markets like unified communications, say, or in Internet-driven television, what is often missing is the amount of work that we’re doing on interoperability—on just how much collaboration there is between the two companies to make our solutions work better together.

Chambers: Our overall goal here is to make very clear to our customers that despite our competition in some areas, customers remain our overall focus. We need to articulate more clearly how and where we are working together to minimize interoperability challenges. Our customers are demanding this, and when customers talk, we listen.

Q: This is the first time the two of you have shared a stage in this way. Do these meetings in New York signal the beginning of something new for the two companies?

Chambers: Cisco and Microsoft have been working together for nearly a decade. Our alliance includes having open discussions about where we can deliver interoperable technology that meets our customer needs. Because both companies have many of the same customers, they are requesting that we work together much more than in the past. Nearly every customer that we serve has a combination of Cisco and Microsoft technologies as critical components of their information infrastructure. Because the intersection of networking and software is so essential to business success today, we recognize how important it is that we work together to make sure that our products interoperate as seamlessly and as smoothly as possible.

Steve Ballmer, Microsoft CEO (left) and Cisco Chairman and CEO John Chambers.

Ballmer: We’re in a period where mobile devices, more powerful processing, increasing storage and faster bandwidth are transforming everything from healthcare to entertainment, education, global trade and much more. Our customers want to be able to take advantage of the new business scenarios and new opportunities that these innovations are enabling. Interoperability between our products will reduce complexity for customers and allow them to focus on creating strategic advantage rather than solving the issues that arise when information technology systems don’t work together well. That’s good for them, and ultimately it’s good for us.

Q: What are some of the areas where you are working together?

Ballmer: There are seven initiatives where we are focusing our joint investments, ranging from security – where we have been cooperating on integration of Cisco’s Network Admission Control and Microsoft’s Network Access Protection since 2004 – to network infrastructure optimization, where the two companies are working to develop a joint architectural blueprint that will help customers reduce costs by deploying solutions that combine Microsoft and Cisco products in a consistent way. For our government customers, we recently announced a jointly-developed reference architecture that will help government agencies communicate with each other while better-protecting sensitive information. And we’re working together to make it easier for consumers to move TV and digital video wirelessly in the home.

Chambers: One of the reasons we are having these discussions is to make clear just how extensive the collaboration between Cisco and Microsoft really is. In total, Cisco and Microsoft have invested close to US$40 million in our joint work together and have over 140 people around the globe who have been involved in these efforts. Other areas where we have interoperability initiatives include unified communications, systems management, mobile devices, IPTV and more. In every case, the goal is to improve the ability of our products to work together so that customers have more choice when it comes to technology infrastructure and can take better advantage of the new opportunities and experiences that the Internet promises to deliver.

Q: Isn’t unified communications one of the areas where competition between the two companies is most intense?

Chambers: Absolutely. But keep in mind that first and foremost, we listen to our customers and recognize that the likelihood is very high that companies will be using technology from both Microsoft and Cisco as they build out their unified communications infrastructure, so interoperability of our solutions will continue to be a top priority.

At the same time, this is absolutely an area where we will also compete. UC is an emerging technology where we are engaged in high-stakes competition and where the two companies have very different approaches—Cisco believes that the best way to address customer needs is at the network level, while Microsoft believes software is the best approach.

Ballmer: There’s no doubt that we compete now and will continue to compete in this area. But what makes unified communications interesting is that it’s many things—it’s instant messaging, unified messaging, voice, video, call center applications, integration with desktop and enterprise applications. We know that customers are going to mix and match these things and some of it may come from Microsoft, some may come from Cisco, and some might come from someone else altogether. That means the interoperability points are really quite critical and we want to ensure that Microsoft and Cisco have the best interoperability in the business.

Q: How do you balance this combination of competition and cooperation, particularly when it is in the same market?

Ballmer: To achieve the promise of the Internet era, interoperability is essential. But so is competition. The quest to achieve competitive advantage is what drives innovation. It might seem counterintuitive that two companies can compete and cooperate at the same time, but it is critical to ensure that innovation moves forward without unnecessary delays and disruptions created by technologies that cannot work together. That’s why we’re focused not only on collaborating with each other, but also on consulting with our customers to better understand what they need from us to ensure that we’re meeting their business requirements.

At the same time, we remain competitors in many areas. Our cooperation will never preclude either company from pursuing any competitive opportunities.

Chambers: The key is that we are committed to working together so that our customers are successful regardless of whose solution they choose. Our approach is based on a set of principles underscored by a commitment that where we do compete, we will continue to address our customers’ needs for interoperability between our respective products. That’s what we’re doing today—we are here to speak to our customers directly and to raise awareness around the deep engagement Cisco and Microsoft have across multiple technology areas. I truly believe that these principles are a model for other businesses. Ultimately, this is about customer success.

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