Cisco wants peace with Microsoft

But turf wars loom as technology giants expand

Tom Sanders at Networkers at Cisco Live in Annaheim, CA, vnunet.com 26 Jul 2007

Customer demand is driving Cisco to prevent a clash with Microsoft, but the networking giant seems uncertain about whether the firms can avoid a confrontation.

Cisco chief executive John Chambers said in a meeting with reporters at the Cisco Networkers user conference in Anaheim, California: "My customers want me to work with Microsoft. They do not want to see us collide in a non-constructive way."

But in admitting that it will be hard to prevent a market clash as both companies are expanding into each other's turf, Chambers pointed out that companies often have a poor track record in combined cooperation and competition.

"We will see if we can create a model that truly allows us to compete at times and partner at times, but nobody has ever done that well. It's called 'co-opetition'. But candidly, you do it only because your customers force you to," said Chambers.

Microsoft is currently pushing into the unified communications market, where Cisco has been playing for a long time with its IP telephones.

Unified communications allow users to route messages across several technologies such as instant messaging, telephone and email.

Cisco, meanwhile, is closing in on Microsoft in the digital entertainment market. Cisco last year purchased Scientific Atlanta, a manufacturer of television set top boxes.

The company has previously acquired Linksys and Kiss, a maker of high-end networked consumer electronics appliances.

The two companies so far have avoided public battles, which Chambers credited to growth of the overall market that allowed both vendors to increase revenues.

While he did not exclude entering additional markets that Microsoft could consider its core, Chambers expressed hopes that the two companies will somehow be able to continue their existing cooperation initiatives.