Cisco CEO John Chambers shared a keynote address at the recently held 2014 International CES conference in Las Vegas. In his address, John shared the Cisco vision for the Internet of Everything or IoE, which he defined as networked connection of people, processes, data and things. And here we bring you the full transcript of the keynote below…
Speaker: Ladies and gentlemen, President and Chief Executive Officer of the Consumer Electronics Association Gary Shapiro.
Gary Shapiro – President and CEO, Consumer Electronics Association
Welcome ladies and gentlemen to the 2014 International CES keynote series. Cisco is the worldwide leader in networking that transforms how people can connect, communicate and collaborate. And we’re so pleased to be joined by John Chambers, Chairman and CEO of Cisco.
You know, John has built his entire career on seeing around the corner, identifying market transitions and making big bets on what’s next and he has been right so often. If you go back to when he keynoted here in 1999 and you listen to that speech, he talked about things like the connected home. He saw the future. He’s called it right almost every time.
John’s vision is help Cisco grow from $70 million in 1990 to record revenues of $48.6 billion in fiscal year 2013. He is interacting to the Internet of Everything (IoE), could be the most far-reaching yet. Along the way, John has been recognized among Time Magazine’s 100 most influential people, one of the Barron’s world’s Best CEOs, the Best Boss in America by 20/20 and BusinessWeek’s Top 25 executives worldwide.
John’s philanthropic leadership has led the Cisco’s global efforts to improve access to healthcare and education and twice earned the U.S. State Department’s top corporate social responsibility award as well as the first Clinton Global Citizen award, the Woodrow Wilson Award for Corporate Citizenship and excellence in Corporate Philanthropy Award, an award given by CEOs to their peers.
It is my great pleasure to welcome to you, John Chambers.
Cisco Keynote – Connecting the Unconnected
John Chambers – Chairman and CEO, Cisco
Gary, thank you.
You know it’s a pleasure to be back at CES. Over the years I have watched how this organization has transformed and watched how in many ways this forum was a predecessor for what’s about to occur in the industry.
If we were to be candid talking a year ago about Internet of Things and what it meant to people, in talking to another CEO I usually had to bring over a glass of wine and sit down and talk with him or her about what it really meant. Same thing with government leaders.
But in the last 6 to 9 months it was like somebody threw a light switch. All of a sudden government leaders, business leaders around the world began to understand this is what’s going to transform their country, transform job creation, transform education and healthcare. And businesses realize this is really going to be a moneymaker and it’s going to also enable me to interface with my customers, my employees and others differently.
But even though we talk about it is a one-year transition for the market, we started thinking about this seven years ago with Smart+Connected Communities. But Wim Elfrink has led for us – the ability to say how would this transform smart cities for the future. But what we originally thought is if you could do connectivity that would be the job. That doesn’t work. You have to do connectivity. You have to get the right data to the right device at the right time to the right person or machine to be able make the right decision. And that literally is what this is about today.
And while I will share some exciting numbers in connectivity and what it really means, it’s about how it changes everyday people’s lives. Four years ago, we talked about what this meant in terms of putting this over a smart grid, moving electricity around. And as you move electricity around, it was not just moving electricity but moving like data 0s and 1s and do it so you can move any data point around at the same time.
As you think what occurred two and half years ago it was about connected industries and transformation that has occurred. And what Gary said, what we do very well as a company, we listen to our customers. We get the market transitions occur in the market and we have the courage to bet on them ahead of time.
Even it’s a big bet to really bet on the future, the Internet of Things really evolved it into a process change. But that bet is starting to pay off and if we do it right, this will change the world in a very unique way and also gives Cisco the opportunity to become the number-one IT player.
A couple comments here and I realize they’re going to be controversial to very beginning. 2014 will be the transformational pivotal point for the Internet of Everything. This is when it moves on Main Street. This is where the majority of cities, countries, business leaders around the world would get it and you’ve seen all the results here over the last two days and you will see it over the next two.
It’s a visualization of – it isn’t just connecting a car or connecting a refrigerator or connecting a video capability to healthcare. It is the combination of these together that changes process and allows for different entertainment outcome and different business decision outcomes.
We will look back one decade from today. And we’ll look at how much the Internet had changed our lives since the inception to today. And you will look at the impact of the Internet of Everything and I predict to you that you will see it will be 5 to 10 times more impactful in one decade than the whole Internet today it has been.
And as you begin to watch about the examples that we show you today, you will begin to see why we believe this. Not just in terms of conception with theoretical approaches but how you translate connectivity of devices to applications to videos, to changing process that result in changing people’s lives, government providing better services and businesses changing e and transforming themselves.
As you begin to think about the Internet of Everything and how this is going to transform our lives, don’t think about it just on connectivity, although we’re going to give you some really cool data points on connectivity, number of devices, applications downloaded. Think about how you combine connectivity of things with changing process, with data, with people to where you literally get the right information to the right device at the right time to the right person for them to make the right decision, or the machine to make the right decision.
And so what you saw from SARA I think will be the future. I think you’re beginning to see this will impact every aspect of our lives. And we have a huge opportunity in front of us, but it takes having the courage to dream what’s possible. And today we’re going to bring on a number of examples where you will see not theoretical talking, or talking in concepts but the actual results we get in the city, the actual results you get in a digital home, what is really capable on bringing this to life for countries and directions.
And as you go through this, your screens occasionally go down so you walk back over here as if nothing happened. You didn’t see that. And you pick up exactly where we started again. And so let’s talk about what is possible today. What could we really do, not two to three years ago from now, but what we could do today?
Let’s start with some very amazing statistics and the numbers that we’ve all heard various degrees at, when Cisco was formed in 1984, how many devices were there connected to the internet? And when you talk about mobile devices smartphones they’re going to be more than the total population by 2015.
But what really begins to get me excited is not that we’re going to have 10 billion connections today of devices going to 50 billion, going to 500 billion, because the way you used to measure the effectiveness of a network was the number devices squared which is power, it’s the applications that go on it’s that will change. 10 billion devices in 2014 will have 77 billion downloads of applications and we’re just taking small baby steps with only a small percentage of the world 1% really participating.
But if you were takeaway only one number from today – think $19 trillion. This is where I get the attention of CEOs, governments, business leaders and I’ll talk about the societal changes, which are just important a little bit later. But over the last two years we’ve done in-depth research and I think you are going to find that actually we end up being conservative.
First on what the private sector could do by industry group. And as we did this we found that the $14.4 trillion over the next 10 years would apply to almost every geography in the world and almost every country theater in the world. It’s going to occur uniformly across the world. It’s not going to occur like many technology trends we had in the past. Perhaps starting in the U.S., going to Western Europe, Japan and then spreading throughout. It’s going to change with a different speed.
But we just released today the section of the public sector, which again I think will be conservative and it’s $4.6 trillion as these are new revenue generation opportunities, new savings, better services to the citizens of their countries. Think about those numbers and you realize what this means to the whole IT industry. Think about what it means in terms of common standards and direction as everything moves to the Internet. And think that it won’t be silo killer applications but multiple applications and smart cities connected, multiple applications and manufacturing companies interconnected and everything you do in your home that SARA gave us that teaser on actually occurring.
That’s why you saw Gary get excited about this a year ago and think about them front page. But it’s only in the last six months did that light switch go on. And so now you suddenly start to see elements of this with connected cars. You see elements of it with a digital home. You see elements of it with the density and the intensity of the screens. But it’s really the ability to bring all this together that will cause this transition that will be bigger than anything that’s ever been done in high tech to occur in a decade.
And most of us agree up to this point in time in high tech what’s been the major value about the society – it was the internet. And all of a sudden you look at the history of the Internet and you say 5 to 10 fold that type of impact in a decade. A major aggressive statement.
Now let’s back it up with some facts because it’s very importantly to me we bring it down to business case with people understanding what we’re trying to do and why.
We’re going to talk about smart cities and we’re going to have Barcelona come up in a little while and talk about it. But to give you an idea the sizing of this, if you make decisions in silos and you think about what you could do with video capability to lower that travel? It’s a 15% saving.
If you think about something I talk about in a moment in waste collection, you can have a 30% saving in your city. Smart lighting alone could reduce crime by 7%. Cameras in key locations reduces it by a lot more than that.
By properly doing this together, you can increase public transportation occupancy by 50%. You can just by smart metering alone reduce the bill being paid by everyone in the world who has the meters by an average of $96 a year. You can by doing two telecommuting, which is where the majority of our young people which I will talk about later generation why the millenniums, they believe you don’t need an office anyhow, you can not only become dramatically more productive, you literally won’t have to pay for transportation costs and loss of the future.
So three examples. The first one is an example of what occurred in the private sector and the ability for an area like retail to use this technology. Retail out of the $19 trillion of savings we estimate with a number of different applications and they are well over 100 in the private sector alone in terms of key conceptual areas we’re focused on, can have a potential return of $1.9 trillion – I am sorry $1.5 trillion.
The ability to size this, what it means it isn’t just simple applications like off the shelf capability, which increases the average sales of a retail organization by 1% plus a year. It’s ability to really put together smart shopping carts, the ability to put Wi-Fi capability into that. The ability to combine flat panel displays and your ability to – with the capability to opt in and purely on the spaces, watch as the person goes through the store. Realize this where they spend their time helps them with a virtual concierge if you will, and takes the power of all this coming together to completely transform their business.
Now retail is a lot more complex than clearly a social site. As you do this one interaction on a social website is going to be replicated in terms of data density by a factor of 10 in the retail physical store. So your ability to handle this big data in a way that transforms their business becomes very key. And as you look at this, it will increase in our opinion and not surprisingly we see it to be conservative by 10% to 15% the shopping baskets as you walk out of that retail store with.
To increase the productivities of the employee by 1% to 3%, to increase the outer shelf capacity inventory rise, to increase your sales by another 1%. And these are just a couple applications that form this basis. It is those benefits that somebody starts to think about every retailer from a very small one to very large one, a virtual to a physical one, or ones that do the combination of the two, to rethink what this really means their industry and their direction.
Garbage cans. If you were to tell me I will be sitting in CES and pumping you up about the excitement of connected garbage cans a year ago, I don’t think so. Until I saw $10 billion. And all of a sudden the way we do garbage collection, waste management that makes no sense whatsoever. You pay a given price regardless of what’s picked up. The majority of garbage that picks up isn’t really needed to be picked up at the point in time.
You put sensors into that and you can restructure how you do garbage collection. You could almost do pay as you throw away type of scenarios. You could reduce literally the cost of waste management of about 30%. You could change the traffic patterns of your trucks as you go out the productivities of your employees etc. And you could all of a sudden, once you have the sensors there you know where I am going with this.
You know how full the can is. You know if there are unique orders that you think it need to pick up or different reason, even hazardous materials or something worse. And it’s that ability to rethink what’s occurring and these are not theoretical approaches. This is what you’re seeing in Barcelona who the Vice Mayor will be with shortly and in this France. Street lighting.
70% of the world’s energy is used up in cities. Using Europe as an example, there is 13 billion a year spent on street lighting. That’s 40% of the total government energy bills in Europe. By using networking technology connecting these various streetlights, you could all of a sudden reduce by 70% to 80% the actual energy costs involved by just doing it.
And then when there’s motion bringing it back up. Now this is where things come together to tell a story so much more powerfully. Once you put this i.e. Internet streetlights in place, you could suddenly use that same streetlights as a plug-in station for electronic vehicles on a charged basis. You could put Wi-Fi capability there to service an underserved area. You do maintenance entirely different of the streetlights and things that go with it and you dramatically reduce crime. And this is where that five-wheel effect of not individual cure applications but an architecture play for the cities suddenly starts to take place.
The key element here – this is not about technology at all. This is really about how it changes people lives, how it affects us, how it changes business models forever. And those are just three out of hundreds of examples I could have done today. And so you begin to see the one number I want you to walk away with – $19 trillion. Not only is it doable, it will require changes in all of this.
And let’s talk about from the IT professionals’ perspective. IT as it enables whether you’re a large company or government or small-company, or a provider in general, it enables us to deliver on this but it’s going to have to change dramatically. It’s going to be a new kind of IT. It’s going to first of all have to be very simple to use.
Secondly, it’s going to be dramatically faster than what we’ve seen before, and speed instead of doing new services to customers that might take 18 to 24 months in the past need to do it in one week. You need to be able to completely rethink how you use your labor pool to really focus on where add differentiation to be able to do this in a way that dramatically changes your services to customers and we will show you that in a moment.
It’s got to be secure, and it’s got to have privacy. And the ability to do this not with simple individual products or individual firewalls but with an architectural play as much is important. And what I just described whether it’s a retail store, whether it’s a city, whether it’s a country requires literally a seamless integration of the ability to share this data, so you can interface to SARA in a way we just described and a way that she expects getting her the right information to make the decision at the right point in time.
When it works and this new IT really is effective, streetlights prevent crime. Our clothing tells us when we’ve got a fever we need to see a doctor. Factories really react real-time to changes in markets and cities will react to literally changing weather patterns as they occur or challenges occur, which we will talk about a little bit later as well.
Smart cities, it’s going to make a huge difference in our lives and a year from now and I will talk about this in a closing, it will be about smart countries. But it’s ability to realize that majority of the population will move 50% today into cities to over 60%. Almost two-thirds. And technology can enable us in a very unique way or can prevent us from achieving our potential in terms of standard living and direction.
As you think about what this is going to occur, let me use an example for you. When I originally heard about smart parking I said you know that’s kind of a cool application. I think it will apply to curtain cities or maybe busy companies. And then I began to realize that parking in cities is one if not their top revenue producer and in cities unavailability of parking spots or the ability to find it contributes to 30% of the load on their highways. In other words, traffic jams.
And if you watch what is suddenly occurring is the ability to change this dramatically and we will talk about what again Barcelona and East France have been able to do. But what’s of interest to me is the number. It’s $41 billion opportunity. It certainly will allow you to real time availability of what’s available, to be able to charge different based on demand, to be able to issue tickets. If people overstayed the time that they’ve done and demand-based pricing.