Cisco’s Emerging-Markets Gambit
The IT giant is strategizing with governments from Saudi Arabia to South America on their technological futures¡ªhoping to score mega-contracts
Two limos hurtle through the desert north of Jeddah, Saudi Arabia, at 110 miles per hour, blown at times into the slow lane by the winds coming off the nearby Red Sea. The delegation from networking giant Cisco Systems (CSCO), including Senior Vice-President Paul Mountford, is running late for a gala groundbreaking ceremony hosted by the Saudi king at one of the biggest construction projects on the planet. King Abdullah Economic City (KAEC) is mostly sand dotted by cranes now. But by 2020 the Saudis expect 2 million people to be living in a futuristic metropolis three times the size of Manhattan, with some of the most advanced technology money can buy. As the black Lexuses arrive, one traveler remarks on the frenzied pace, and Mountford laughs. “That was nothing,” he says.
Not with so much at stake. King Abdullah plans to build four brand-new cities and upgrade the country’s infrastructure at a cost of $600 billion over the coming years, and Mountford is chasing scores of similar projects in emerging markets around the world. This goes beyond China and India. Mountford’s mandate is to tap the next tier of emerging nations, from Saudi Arabia and Russia to Brazil and Chile. It’s a sprawling group that Cisco, and companies like it in technology and beyond, is counting on for much of its growth. But as the financial crisis hammers many of these economies, Mountford will have to hustle to deliver.
The groundbreaking at KAEC makes clear how hard Cisco is pushing. Its executives form the largest Western contingent by far, and, after the event, the company hosts the king in an adjoining tent for a demonstration of Cisco technology that allows a person elsewhere to appear on stage as a holographic image. All this before the company has won a dime of business for its products.
Cisco isn’t just selling technology. Mountford’s pitch is that Cisco, more than any other company, can help countries such as Saudi Arabia modernize their economies and become leaders in the Internet Age. The company argues that, by investing in the Internet infrastructure Cisco sells, these governments can better educate their citizens, improve health care, and boost national productivity. They may even be able to create their own tech sectors, giving citizens the opportunity to become well-paid “knowledge” workers like those in Bangalore or Guangdong, China. It’s the promise of the Cisco Effect. “This is a chance for Cisco to [influence the world] on a much bigger scale,” says John T. Chambers, the company’s chief executive. “It’s about raising standards of living and creating large middle classes.”
Tags: Ericsson, Huawei