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SCMP Reporter

Networking-equipment maker Cisco plans to boost activity in the service-provider market, especially in the mobile wireless segment, in a move to shake off its wired image and find another engine of growth.

'The service-provider market is very important to us,' said Larry Lang, vice-president of Cisco's service-provider business.

'Service providers make up about 40 per cent of our business. It is also our fastest-growing business.'

Cisco hopes to sell more of its IP-based equipment to service providers and large telecom carriers which are migrating infrastructures from circuit-switched to third-generation networks.

Mark Milazzo, Cisco's director of wireless business development, said: 'If you look at the fixed-wire-line telecom business, Cisco has gone from 3 per cent of the market to 13 per cent of the market now.

'People are surprised. They go 'Wow, you are actually in that business'.'

Mr Milazzo said Cisco provided packet-data infrastructure to all sectors of the global telecoms industry in an US$8 billion business.

The company has just started to focus in on its mobile business, after establishing its position as the leading vendor in Internet and enterprise networking equipment.

To gain expertise in wireless communications and networking services, Cisco linked up with mobile-phone and chip maker Motorola a couple of years ago.

The two also formed a joint venture called Invisix to deliver wireless services on fixed and mobile wireless IP-based networks.

The idea was to blend the established operational strengths of Cisco and Motorola in Internet infrastructure, wireless communications, and network services.

Other equipment manufacturers have formed similar alliances. Juniper Networks and Ericsson have announced plans for a joint venture to deliver mobile Internet products for ISPs and mobile operators building GPRS (general radio packet services) and 3G systems.

In this sector Cisco also will clash with long-time rivals Nortel Networks and Lucent Technologies, which have long experience in selling networking equipment to telecom firms.

Cisco's wireless mobile business received a much-needed boost recently when Equant and Sonera - two of the largest network operators - said they would use Cisco's IP infrastructure for their global GRX (GPRS roaming exchange) service for mobile operators.

A centralised, IP-based routing network for interconnecting GPRS networks, the GRX service will allow users to roam between the global GPRS networks of mobile operators, and provide access to mobile Internet applications and services from anywhere in the world.

'We are basically solving the problem of international roaming for mobile-phone services, and GPRS services, which is the predecessor of 3G,' said Mr Milazzo.

The IP-based networks that many telecom operators would be using to provide 3G services also could mean brisk business for Cisco's IP and optical equipment.

'We are selling optical equipment that is optimised for IP and the Internet, and, not surprisingly, that is where the area of growth will be,' said Mr Lang.

Fibre-optic cables have been used for telephone companies to carry voice traffic, but the increased use of the Internet to carry data and video traffic - on top of voice - is creating huge demand for bandwidth.

Last year, Cisco entered the optical business using its trademark strategy of buying start-ups and absorbing them. In just six months, it spent close to US$10 billion to acquire three optical companies.

''We are not trying to do optical just for the sake of doing optical,' said Mr Lang.

'We got into it, because suddenly, it becomes very relevant to the world of the Internet, which is Cisco's world. and we get a lot of synergies by doing these two things together.'

'Optical networking is of business interest now, because any time there is a

transition, that is the time when you get major shifts in market share.

'That is when we try to enter new markets. And that is what we are going about now.'



Cisco targets key mobile wireless area for expansion