Cisco's Chambers: Megavendor ranks about to be thinned

ORLANDO---Cisco CEO John Chambers said as many as half of the top six enterprise technology vendors could fade out of the top rankings over the next five years. The winners are likely to have software, silicon and hardware to integrate.

In a keynote interview at the Gartner Symposium, Chambers was asked to handicap the megavendor field, which is poised to be disrupted. The megavendor field in business tech consists of Cisco, Microsoft, IBM, HP, Oracle and SAP.

"Any of the top six vendors who thinks they'll be in that top six five years from now for sure will be wrong," said Chambers. "Out of the six of us at best four or three will be in the top five years from now."

Why? Business models are changing too quickly and some large tech players will take a hit, he said.

Chambers' take is that companies will need an integrated package of hardware, silicon and software to manage market transitions. "The companies that lead in the future will do all three," said Chambers. He added that you'll have to have control of chips, hardware and software to move quickly. "If you have just software you won't be able to move fast enough," said Chambers.

Megavendors also need to innovate. Chambers asked CIOs who looks to their big vendors for innovation. There were no takers. Then Chambers asked what CIOs look to Apple, Facebook or Google for innovation and hands went up.

When asked to name the likely vendors to fall, Chambers dropped a few hints. He said that if all you have is a software piece "you won't be able to move fast enough." That mention seemed to indicate SAP and Microsoft could stumble. IBM, Oracle and Cisco have processors, hardware and software. In that rationale, HP, which lacks silicon, could be left out.

All of that said, Chambers seemed to know where Cisco needs to beef up.

"You're going to see us move in software on multiple fronts," said Chambers, who said Cisco is aiming to double its software revenue in five years.

Chambers was asked whether it was good to be Oracle. Chambers said the company has mastered the hostile takeover. "Do I like Oracle's hand? Oh yes," said Chambers. Oracle has software, silicon and hardware, but Cisco is right place at right time, said Chambers. "I wouldn't bet against Oracle," he said.

The Cisco CEO had a different take on HP.

"HP is a company that has lost its way," said Chambers, who said CEO Meg Whitman can turn it around.

Among other topics:

• Best accomplishment over last 17 years? Chambers said he reinvented the company and himself. That knack for reinvention came from working at IBM and Wang and seeing key technology transitions missed.
• Cisco's next CEO will have to be willing to challenge what Chambers has done. Cisco's next CEO will also have to be less command and control and more collaborative. Chambers said Cisco is looking to transition to a new leader in a few years.
• A shortage of engineers and immigration problems inhibit bringing in technology talent. The talent will be missing is someone who knows business and IT.
• Vendors and customers need to evolve that role of IT and know business first and how to implement IT second.
• "Internet of everything will be the platform for the future," said Chambers.
• Cisco gets a "fair" mark on ease of use.
• On Chinese tech firms (read Huawei), Chambers said the U.S. can't make the mistake of judging companies by location. "China will be an ally of the U.S.," he said.
• Chambers would toss the patent system entirely. He also said that tech companies shouldn't be suing joint customers unless it's a critical piece of intellectual property.