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Cisco CEO John Chambers Values Internet of Things at $19T #CES2014

John Chambers.jpg

You probably already know that John Chambers, chairman and CEO of Cisco Systems, likes big numbers. Today in a keynote at the 2014 International CES in Las Vegas, he may have picked his biggest number ever.

He pegged the value of the evolving Internet of Things (IoT) — or Internet of Everything, as Cisco calls it — at $19 trillion.

The Connected World

First off, if you're not up to speed: The IoT is loosely defined as connections between devices, cities and people. But the IoT is actually a collection of vertical markets and industries — and references the way they will be affected by connected devices and consumers.

Chambers, in his keynote, gave many concrete examples: Cities saving money and increasing revenue by monitoring parking, lighting and water systems; connected homes with smart security and entertainment systems controlled by mobile apps; and eventually smart healthcare through an array of monitoring systems.

Keynotes inevitably devolve into sales pitches, and this one was no exception. There was a product demo of Cisco's Videoscape Snowflake technology and a few infomercials.

But the mission was clear. With Cisco dogged by slow growth and a stagnant share price, it may have been Chambers' biggest pitch in years, and he worked hard to paint a large opportunity. He told the crowd of thousands at the Venetian Hotel that the IoT is bigger than the Internet.

2014 will be a transformational, pivotal point for the Internet of Everything … by 2017, it will be five to 10 times more impactful in one decade than the whole Internet has been," said Chambers. And then he gave the entire opportunity that big, total number: $19 trillion.

What it Means for Cisco

Will the IoT make five to 10 times as much money for Cisco? Investors have reason to be skeptical, as Cisco recently took down its longer-term growth forecasts.

Chambers' vision gives investors an idea of where Cisco hopes to make it's next big bets. It's already created an Internet of Everything business unit, and Chambers said Cisco is making $100 million in investments in IoT startups — a number that will likely grow to be "much more."

Chambers also made it clear that he's very interested in the smart cities market.

Antoni Vives, the deputy mayor of the Spanish city of Barcelona, was a guest speaker during the keynote. He explained how the city is using the IoT to save money on water, sanitation and parking services. How much money is it saving? He said the city has saved $58 million a year using a smart water system, $37.5 million on smart lighting and has increased parking revenue by one third through the use of smart parking meters.

The city "needed a backbone," he explained, "and the Internet of Everything is our backbone."

Focusing on ROI

Chambers made a clear and compelling pitch. By investing in smarter infrastructure, both cities and companies could see a direct return on investment (ROI). And he was armed with numbers to back up that claim.

For example, he said some cities can reduce trash collection costs up to 30 percent by monitoring garbage cans.

He also referenced the huge societal impact that will occur the world gets more wired. By 2015, the numbers of mobile devices and smartphones will exceed the global population. In addition, there will be 77 billion apps — which could mean $5 trillion for the whole IT industry and $19 trillion in economic impact worldwide.

He wasn't too specific about the breakdown of that $5 trillion or $19 trillion. But he was emphatic that he thinks the IoT is the biggest technology opportunity, ever.

"This is a new world of interconnected devices is going to have a lot bigger impact than anything [ever before]."

Title image from the Cisco website.

About the Author

R. Scott Raynovich is an independent author, technology analyst and media consultant. He publishes a blog, The Rayno Report.

 
 
 
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