Cisco Unveils $90,000 Network Router to Lure Carriers (Update2) Share Business ExchangeTwitterFacebook| Email | Print | A A A
By Rochelle Garner
March 9 (Bloomberg) -- Cisco Systems Inc., seeking to boost sales to phone carriers, will start selling an Internet router that lets Web users download video, songs and other data faster.
The router starts at $90,000, the San Jose, California- based company said in a statement today. Cisco, the world?s biggest network-equipment maker, has invested $1.6 billion in the product line, which AT&T Inc. has already tested.
Cisco, which posted its first sales increase in a year last month, is benefiting as consumers watch more videos on YouTube, Hulu.com and other sites. Chief Executive Officer John Chambers called video ?the killer app? because it needs more bandwidth than voice and data, spurring demand for the company?s products.
?You?ll see us focused on video,? Chambers said today on a Web cast. ?This talks about the next generation of the Internet changing our lives.?
The router lets carriers offer Internet speeds of 1 gigabit per second, said Pankaj Patel, a Cisco senior vice president. That?s about 100 times faster than most home connections today. Cisco said the product allows all the people in China to have a video call simultaneously.
Cisco rose 2 cents to $26.15 at 12:43 p.m. New York time on the Nasdaq Stock Market. Yesterday, the shares reached their highest level since June 2008.
?Anticlimatic?
Investors may have been disappointed by today?s announcement because Cisco had advertised it as something that would change the Internet forever, said Simon Leopold, an analyst at Morgan Keegan & Co. in New York. The stock rose 3.7 percent yesterday.
?It was a little bit anticlimactic given the degree of hype leading into it,? said Leopold, who rates Cisco shares ?outperform? and doesn?t own any. ?We expected something a little broader, more of an architectural shift, more of an end- to-end change to networks rather than a single product.?
Global data traffic will probably more than double every year through 2013, fueled largely by video, according to Cisco. That increases demand for the company?s routers and switches, which direct the traffic. In general, large businesses buy switches for their corporate networks. Phone carriers and Internet-service providers, which account for about 35 percent of Cisco?s revenue, mostly purchase routers.
AT&T said it tested the new router as part of a successful trial of ?backbone network? technology that will support growing volumes of wireless and wired Internet traffic. The company, whose network is strained by demand for smartphones such as the iPhone, has said it is working to reduce congestion in markets such as New York and San Francisco.
Google Network
Cisco?s announcement comes after Google Inc. said it plans to build an experimental broadband service that will offer Internet speeds of 1 gigabit. Google, the world?s most popular search engine, is developing the network to show the potential of high-speed Internet service.
?Google is a wonderful company,? Chambers said today. ?We love anyone who puts loads on the network.?
Cisco is also expanding in markets such as mobile Internet and videoconferencing to fuel demand for its products. Last year, Cisco acquired Pure Digital Technologies Inc., the maker of the Flip Video palm-size camcorders. Flip users can upload videos directly to Web sites, increasing network traffic.
To contact the reporter on this story: Rochelle Garner in San Francisco at rgarner4@bloomberg.net
Last Updated: March 9, 2010 12:45 EST
http://www.bloomberg.com/apps/news?pid=20601087&sid=aVwqd8mJdUCU&pos=6#
