Cisco 2006 Annual Report Download - page 9

12 Cisco Systems, Inc.
Vision: Product Innovation
We believe Cisco’s leadership is dependent upon three major factors. First, a vision of how the industry will evolve.
Second, the strategy Cisco will employ to gain leadership, based upon that vision. And third, our effectiveness in
executing on this strategy, as measured by such factors as product leadership, market share gains, and leadership in
our customer segments.
To Cisco, vision means the ability to broadly anticipate how the communications and IT market will evolve and under-
stand how the network drives this evolution. We believe the network will change the way the world works, lives, plays,
and learns, and that the network will have intelligence distributed throughout it. We see, as the market plays out, that
the network will literally become the platform for all of life’s experiences by delivering applications and services to our
customers and by enabling greater productivity, new business models, and expanded forms of entertainment.
Internet trafc continues to grow, driven in part by the rapid expansion of video trafc over the network. Our successful
acquisition of Scientic Atlanta provided Cisco with the technology, capabilities, and talent that help to complete the
“quad play” offering of data, voice, and video, with mobility. Today, we address the growing demand for networked
video with expertise and a unique understanding of the functionality requirements of the underlying network, which we
believe are unmatched by our competitors. In scal 2006, we enhanced our position as a strategic business partner
for service provider, enterprise, and commercial businesses of all sizes, as well as consumer customers. Cisco has the
vision and tools to integrate the business and technology architectural approaches for these networks.
Our technology architectural play with the convergence of Layers 1 through 7 of the OSI stack continues to gain traction
and mindshare. For example, customers understand the leadership, total cost of ownership, exibility, and investment
protection advantages they receive when they install a Cisco switch, which is designed to allow them to easily and
cost-effectively add market-leading voice, data, security, wireless, and other capabilities to their existing Cisco networks.
This innovation strategy is a powerful differentiator versus our competitors, who are usually present in only one or two
product categories or customer segments, and often do not integrate their products from an architectural perspective.
John T. Chambers, President and Chief Executive Ofcer
To Our Shareholders
Fiscal 2006 was a record year for Cisco in many ways. We reported record
financial results for the year, and we continue to believe that Cisco is poised for
taking advantage of market transitions in unique ways. Our record results are
due in part to our successful implementation of our strategy, given our vision of
how the communications and IT industry would evolve. As intelligence moves
throughout the network, the network is becoming the platform that enables
most forms of communications and IT.