Cisco CEO Chuck Robbins Talks About Trade and the Wonders of 5G

(Bloomberg Businessweek) -- Robbins appeared on Businessweek Talks, where he addressed how the trade war is affecting Cisco Systems Inc. and the competitive challenges facing the $49.3 billion tech equipment maker.

How has the trade war affected Cisco so far, and how are you managing the impact?

Because we have a globally distributed supply chain, we have the capacity to move things around on a regular basis. Our teams did such an amazing job optimizing our supply chain over the last eight months that they actually put us in a position where the latest 25% [tariff] really had a pretty nominal effect from a pricing perspective. My bigger worry is not the impact it will have on us at Cisco, but more on the macro and what it does to customers’ overall sentiment.

How different will 5G be? What’s the potential?

Think about where you are today and what you can do with your mobile device vs. what you could 15 years ago. This is no different. You’re gonna see a steep change, and this one is probably exponentially better than what we felt over the last decade.

What kind of applications could we see?

With speeds of four, five, six, eight, 10 times [current levels], you’re going to see more than my 18-year-old son putting his phone in the middle of a table and having eight of his friends around, playing real-time gaming because the phone is serving as a hotspot. We also should be able to deliver real-time health care into rural areas in ways that we haven’t been able to. That’s because we’ll be getting [very high] speeds out into these environments over spectrum as opposed to having to go pull fiber and run terrestrial circuits. Hopefully, it will change the economics for our carriers on a global basis.

What’s the biggest challenge facing Cisco?

The irony for us is that six years ago there were seminal threats that were believed to be fatal to our company. And what’s turned out to be the case is that we’ve actually embraced many of those shifts and turned them into advantages. The transition to cloud that was viewed as being very negative has turned out to be very positive for us. As one of my engineering leaders says, “We moved the applications to the cloud, we didn’t move the employees to the cloud.” Our biggest challenge is prioritizing areas to invest in right now, which is a good place to be.

What do your customers say has changed the most in how they conduct their businesses?

Technology is no longer some optional cost center; it’s now at the heart of the strategies that they’re deploying, whether it’s delivering citizen services in government or whether it’s the way a bank interacts with its customers in the branch. But technology is in the middle of everything. So our customers don’t say anymore, “Oh, it’s a little tough, so I think I’m going to slow my spending here.”
 
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