Cisco Keynote at 2014 International CES by CEO John Chambers (Transcript)

John Chambers

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.

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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.

Now let’s look at communities that are really doing this and think what I talked about earlier, not individual killer applications but how it comes together to resolve the opportunities and the potential of smart communities. Roll the video please….

[Video Presentation]

It gives me great pleasure to welcome on stage the Vice Mayor of Barcelona Mr. Toni Vives. Tony, if you come out and join us…

John Chambers Q&As Toni Vives – Vice Mayor of Barcelona

Toni, it’s a pleasure. Thank you for being with us.

Toni Vives – Vice Mayor of Barcelona

Thank you very much.

John Chambers – Chairman and CEO, Cisco

For those of you who may not be as familiar with Barcelona other than a great place to visit, it is one of the few cities in all of Europe that is running a surplus. It is the example of innovation when other cities and other mayors talk around the world on what can be done.

You all were able, Toni, to grasp what it really means to really transform a smart city, how long have you been working on it and what are some of the key areas that people in this room would get excited about?

Toni Vives – Vice Mayor of Barcelona

Well, the first thing I want to say is thank you for hosting us here. I have to ask you for a couple of papers before we start.

John Chambers – Chairman and CEO, Cisco

The fact that 5000 people are watching, whatever you need you’ve got.

Toni Vives – Vice Mayor of Barcelona

Okay. First thing is we have elections in one year time. I want a copy of that video. I love it. And the second thing I want some of your pictures because my wife doesn’t believe me when I talk – didn’t believe me when I talked to her that I was coming to Las Vegas to talk about Internet of Things.

So we have been working on the concept for a while now because we were upset with the quality of life of our people. And we had to stop with it. So we went through several issues such as for example a smart water and we are saving $58 million on that.

John Chambers – Chairman and CEO, Cisco

This is $58 million a year.

Toni Vives – Vice Mayor of Barcelona

A year – you are right. We are working very hard on lighting and we are saving in a year a third of our invoice which is around $37 million. We have increased our revenue in our parking management we own. Let’s say we concession but we own the parking slots in Barcelona and we have increased in a year roughly a third also of our revenues, which is about $50 million also, which is quite a lot for us. We are not a big city but we try to be great performance.

But what’s more important for us is jobs – job creation and in six, seven year time we have generated 47,000 jobs related to smart cities right in the city of Barcelona, which is also a lot, you see Barcelona even though the metropolitan areas 3.5 million, 4 million people, the exact city of Barcelona is only 1.7 million. Within that small city, we have generated 47,000 jobs in six years time which is I think quite a lot. We’re good at that, I think.

John Chambers – Chairman and CEO, Cisco

Yes, you are. And it’s interesting it was until I asked Toni when we talked in Barcelona and I have been coming there for four to five years now watching how you all transformed the city, and you had first talked about what it means to your citizens. And when you talk to the citizens they really don’t understand the technology behind it. How do you get your citizens excited about this and what it really means and maybe could you share a story or an example?

Toni Vives – Vice Mayor of Barcelona

Yes, I always talk about my mother because she thought that I was a writer and then she – well, you are a politician but what you say I don’t understand you. I voted you because you are my son. She wears one of these devices where we have deployed what we call telesystems – is that the word in English? It’s telesystems for the elderly. And she looked very nice, I mean she was happy and she is about her 70s and I told her you look very well mom and you look as if you were 16. She was happy when I said that – which is true.

And she said to me, you know, since it’s a happy thing hanging on my neck, she can – she pushes a button and she is alone and she’s got a problem, she has her social services at home with her history and she said, “Since I have that button here, I feel much better, I feel safer.”

I told her, “Yeah, that’s good. But you know mom that’s because of what’s playing about technology”. And she stared at me and said, “What?” “Yes, mom, technology”.

“What is technology?”, she asked me. So in a way technology was transparent for her and I think that’s the goal that we have achieved in our city. Making people understand that quality of life is related to what you, people, in this case, Cisco and us civic servants can deliver to our citizenship, which is better services, and technology is going to make it even though people don’t recognize it. That’s the main goal, that’s what we have achieved.

John Chambers – Chairman and CEO, Cisco

When you talk around the world, first, how many cities and mayors do you talk with? Then how many people visit you and what did they ask you and what do you say here’s where we’re going?

Toni Vives – Vice Mayor of Barcelona

We get 180 official visits per year in Barcelona, which means mayors, which means that once every two days, I get mayor in my office. And common Barcelonan asked us, how did you do that? And I will say that we have built a community and we have built a community-based on that social dream I was talking about in the video. And we have built the community based on services and we have built the community making sure that you companies understood that it is not just about making money — it is about making a lot of money, you and us, but it’s a kind of generating a convergence between you and us.

John Chambers – Chairman and CEO, Cisco

And it’s a transformation for both sides. From the government leader side, you’re also looking at business, they are trying to sell you something. And from the business side we’re looking at how can we assist in your goals. But whereas the win-win and you were able to transform that. We were able to focus on outcomes together.

Toni Vives – Vice Mayor of Barcelona

But you have understood something. At least Cisco has something in our case. We saw that we had problem. Big companies have big problem also. We were building our organization through silos. We’ve started to break it and Internet of Everything is helping us out, that works and in the frontline. That works how and we are responsible for housing, urbanism, environment and information technologies and communications.

And we needed something to become our backbone and Internet of Everything has become the backbone of that. You have seen examples in the video. We have a lighting pole there in which you have lights and we have devices that count people, and we have the device that understands the level of pollution that we have in the city and recognizes the number of empty slots that we have from the parking perspective. That in a single pole, that’s the future of a city and you guys have to understand that there we have the winning scenario, otherwise we would be broke.

On the other hand, in the frontline my mother understands that there is something coming towards her that she didn’t have before, that improves her daily life. And this something – people don’t vote us because we are good managers. People vote us because we have visions and you help us out to implement them. That’s why we are so keen on working with you and we think that we can help you a lot in order to define the kind of products that you have to develop.

John Chambers – Chairman and CEO, Cisco

Toni, it’s an honor of being your partner. It’s also when you want to see not just the well-run city, think about Southern Europe, think about the economic challenges and yet you have a city that is so progressive, so innovative, running a surplus and changing the lives of their citizens, one of the most competitive cities in the world and then willing to spend the time to help out us. Toni, it’s an honor being your friend and business partner.

Toni Vives – Vice Mayor of Barcelona

Thank you very much.

John Chambers – Chairman and CEO, Cisco

You know I get excited talking about businesses and how this transforms businesses. And now what you’ve seen is the ability to transform cities with the applications coming together, the convergence in a seamless fashion.

Now let’s bring it closer to home and literally think about the home of the future – the digital home. When you think about where this goes it will change everything and understand that the generation Ys who are growing up today. They expect a screen as their primary interface. They begin to think about their home having different capabilities. They check their smartphone every night right before they go to bed and first thing to hit up in the morning. That’s probably the only generation Y issue that I mentioned, that’s one for one for what I do.

But they also think about it differently. They don’t think about an office as a physical place to go. They actually view they can do their job very effectively – work hard, play hard and they expect access to information which allows them to make their personal, their social, their entertainment or their business decisions in a way that we have to rethink how the home is connected.

This is the first generation that literally in many ways has grown up with the screen in every aspect of their lives. Let me roll the video if we were to kind of introduce the concept and where we see this going.

[Video Presentation]

So if you begin to think about this, you begin to think about what can occur in the home and the ability to toss this video to any screen as you move forward. It will change our lives and it’s a whole approach on just-in-time done differently for every aspect of our lives, just in time data to just-in-time arrival at a location to just-in-time to the right device to just-in-time to the right person to allow them to make the right decisions. And while that’s easy to say much like the demos that we talked about before, it’s the ability to do this with the Internet of Everything that makes the stunning differences we talked about.

Service providers will be a huge partner in this in terms of going forward, and there are a number of service providers who are making major inroads in this area but in my opinion one of the very most progressive and the one that’s seen the most success in many areas is AT&T. They literally have looked at how they do this seamlessly. They thought out of box and had the courage to start this over three years ago.

John Chambers Q&As Ralph de la Vega on Stage

So it’s my pleasure to welcome Ralph de la Vega, President and CEO of AT&T Mobility out on stage. Ralph, good to see you.

Ralph de la Vega – President and CEO, AT&T Mobility

Good to see you. Good to see you. Great. How are you?

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John Chambers – Chairman and CEO, Cisco

Good. You know last year when we were together at CES, and we talked about where you’re going with this, you’ve all accomplished so much in such a short time period.

Ralph de la Vega – President and CEO, AT&T Mobility

It’s really amazing. Just a year ago you were on the stage with me at our developer summit, right?

John Chambers – Chairman and CEO, Cisco

Absolutely. Now without being modest, talk about what’s been the acceptance, what you’re doing and what has been the consumer acceptance and how are you doing versus your own expectations?

Ralph de la Vega – President and CEO, AT&T Mobility

We love what’s happening with the digital life project that we have launched in now 59 markets and it’s the first all IP all digital UL approved on security and automation service that is designed from the ground up to work with smartphones and tablets. And all that has happened is the net promoter score, which is how we measure customer satisfaction, for all the installations that we have done over the past year are double the industry average for the alarm industry in this country.

John Chambers – Chairman and CEO, Cisco

So basically you take a application, maybe a killer application, maybe just a foundation for all the other applications and you are twice what all your peers have been able to do.

Ralph de la Vega – President and CEO, AT&T Mobility

Absolutely. And the thing about this application that is it’s so easy to use, that I want to give you an example so you honestly get what this Internet of Everything causes people to change.

We had a customer in the first time we rolled this out that had a client problem in neighborhood. They were having packages that would be getting delivered for the Christmas season and deposited in ports just stolen. Our customer decided to point the camera which has motions detector in it to the package, used their smartphone to program it to safe if you detect motion, send me a picture to my smartphone so that I know that somebody has taken the package and then plan it a freight back, don’t try to set home by the way.

So guess what happened. A few hours later the package was picked up, the camera took the picture, sent it to the customer, the customer called the police and they nabbed that burglar 30 minutes later. That’s digital live.

John Chambers – Chairman and CEO, Cisco

And it’s an application we can all understand but take the next step. You all made some announcements with the automotive industry and the connectivity to where really the generation Y’s office, it’s their home, it’s their automobile, your ability to transfer entertainment, transfer to any screen literally almost with gestures and it’s going to take us way beyond just basic light and the security coming with Cisco –

Ralph de la Vega – President and CEO, AT&T Mobility

We’re so pleased with what’s happening with the connected cars especially at CES. We announced just yesterday that we’re running a new platform called AT&T Drive for connected cars. And the vision that we have is when you get in that car and that car gets you home, the car talks to the house and it does whatever you wanted to do in the house. And what I love about it is not only did we announce that Monday, we also announced that we have signed deals with Chevrolet, with Audi and Tesla to connect all of their cars.

So I think this is a great thing for the future of the country to be able to have that Internet of Everything where the house is connected to the car and to anything that you wanted to be connected to.

John Chambers – Chairman and CEO, Cisco

You know it’s fascinating watching because my industry, that’s our own company and many of our peers tended to think about just connectivity, and I would argue many service providers did. But you really have transformed what you focus on with this in terms of really delighting your customers, making it simple and easy-to-use. How did you do that?

Ralph de la Vega – President and CEO, AT&T Mobility

We have changed – for example, I will give you a great example of this – all of our stores that we have have been re-designed. And it’s one of the reasons we won the JD Power award for customer service in retail and customer service as well. We’re focusing not on selling phones or selling gadgets. We’re selling experiences to customers as outcomes – how to make their homes more secure, how to lead a healthier life, how to get more connected to the music that’s important to you and my selling solutions, it helps us to solve the problems that customers have.

John Chambers – Chairman and CEO, Cisco

And what role does Cisco play with this?

Ralph de la Vega – President and CEO, AT&T Mobility

You guys have been great from the beginning. I mean what I love about this and I really mean it. It is amazing the help that you’ve got because we’re blazing trails here folks. The signing that first all digital all wireless home security system is something that quite frankly even UL had never seen before. So you work with us and we have some rough spots, but we can always count on you and your team. When we needed you, you were there and it’s been the key to us being able to launch this in 59 markets in the U.S. and we’re getting all kinds of interest from international carriers wanting us to license this technology, now to the end, of course, we are planning to do.

John Chambers – Chairman and CEO, Cisco

So when you really talk about a new form of IT and the definitions I talked about earlier and what the top IT players, and our goal was clear – to use Internet of Everything to become the top IT player it does – you have to think about making it simple. You have to think about making it secure. You’ve got to do your services very very fast. It’s got to be seamless that you go across not just moving video to any screen but ability to combine security with video with mobility in a very unique way and then you’ve got to make it intelligent throughout.

It’s an honor being your partner.

Ralph de la Vega – President and CEO, AT&T Mobility

It’s a great pleasure to be here. Thank you for your great support.

John Chambers – Chairman and CEO, Cisco

Now we also understand that video is clearly the killer application at home. And talking about where this is going you’ve seen a lot of announcements here at CES on where the TV industry’s going, where the screens are going etc.

I would like at this time take a step back and really talk about what we see occurring this industry and invite our chief demonstration officer Jim Grubb up on the stage really to bring this live for us. Jim, it’s good to see you, buddy.

Jim Grubb – Chief Demonstration Officer, Cisco

Hi John, good evening. Good to see you.

John Chambers – Chairman and CEO, Cisco

Good. So we made some announcements here at CES and if you will, kind of work those into where we’re headed. But let’s also talk what do you see really the industry going and how that many of the things we talk about today actually not only converge together but converge relatively seamlessly together?

Jim Grubb – Chief Demonstration Officer, Cisco

Well, to do that, John, we’re going to show how video will be one of the key ways that we interact with the Internet of Everything, the Internet of Things. So we’re going to show our latest Videoscape release that we announced yesterday. It’s called Snowflake 14.

John Chambers – Chairman and CEO, Cisco

And Videoscape is our capability to deliver this from a cloud –

Jim Grubb – Chief Demonstration Officer, Cisco

That’s right.

John Chambers – Chairman and CEO, Cisco

And really make video usable in ways it wasn’t before.

Jim Grubb – Chief Demonstration Officer, Cisco

We’ve got it running on this beautiful new Samsung Ultra HDTV over here. And I’m going to control it from my mobile device.

John Chambers – Chairman and CEO, Cisco

It’s amazing resolution.

Jim Grubb – Chief Demonstration Officer, Cisco

So you’re seeing the Videoscape user experience here and in the middle here you see the first nine channels of my channel lineup. So I can scroll through these. You will notice all of the channels are live continuously. If I want to go to the next nine channels I just pinched on my mobile device here. So I can scroll through all the live channels. I can also take a look at the on-demand content that’s available through the store. So if I scroll over here we’re looking at content that’s available in the store.

If I scroll over to the left here you’ll see my library, so this is any DVR content that I have recorded –

John Chambers – Chairman and CEO, Cisco

So these channels are [allowable] one time, you literally can mix and match whatever you want to do –

Jim Grubb – Chief Demonstration Officer, Cisco

That’s right. And it’s really a 3-D experience here. So for example, if I just clicked on HBO here, we will be able to take a look at the HBO portal. So now what I’m seeing is all of the on-demand content that’s available for HBO, I can just pinch to look at the different episodes. For example, here Boardwalk Empire, and that’s what the call the portal capability.

I also want to show you, though, the timeline and so what I am going to do here is we’ll go ahead and watch this HBO clip here, this movie. And then I will swipe sideways on the mobile device. And what you’re seeing now is the timeline. So rather than having to individually DVR anything, actually everything is being DVRed in real-time. Some of our customers that have deployed this have implemented seven days of previous television on 400 channels.

So here’s live HBO. If I just swipe this direction I see the start of the program that was just on. And I can keep swiping back to see the programs that have previously been on. I could even swipe forward to see promos for programs that haven’t been on yet.

Now as you mentioned, John, this is available through the cloud and we offer to our service provider customers either for private clouds or public clouds up or to be implemented simply as a service that they buy directly from Cisco. And I am going to show you how it is to deploy new capabilities, because this is a cloud-based service.

So we’re going to step up to our management console –

John Chambers – Chairman and CEO, Cisco

So you’re really talking about the ability to combine a whole bunch of screens. I can literally have chat sessions with families and we can watch our common sporting event together. We can watch movies together. We will be able to interface off of our iPad into this and interact in ways that we just not thought about before.

Jim Grubb – Chief Demonstration Officer, Cisco

That’s right.

John Chambers – Chairman and CEO, Cisco

For the service providers this is new revenue opportunities. For the consumers, it’s a different experience in terms of the capability and the ability to certainly deliver these services not in six or 12 or 18 months but literally almost –

Jim Grubb – Chief Demonstration Officer, Cisco

With just a few months, exactly. Yes, so for example – so these are my packages, we got the premium and standard and the value package. And I am going to take a look over here. For example, let’s choose the “map your movie” feature. I’m going to add this as a service and will make at a premium service.

John Chambers – Chairman and CEO, Cisco

As we are watching movie there, basically you are able to see where it occurred like… like you’re in Vegas.

Jim Grubb – Chief Demonstration Officer, Cisco

That’s right. And I am also going to pull over the home automation Cinema mode, so we’ll put that in the standard and the premium. And then we will set the bundle and then we will go ahead and we will deploy that. So with just a few mouse clicks we have added new features to these packages that we can then offer our customers.

Now let’s go back over, John and take a look at a couple of the features that we just added. Some of the advanced capabilities of Snowflake.

John Chambers – Chairman and CEO, Cisco

So Snowflake is really a user interface which allows tremendous flexibility and speed of services delivery.

Jim Grubb – Chief Demonstration Officer, Cisco

That’s right.

John Chambers – Chairman and CEO, Cisco

And dramatically lower operating costs.

Jim Grubb – Chief Demonstration Officer, Cisco

That’s right.

John Chambers – Chairman and CEO, Cisco

So think about service providers, not just the revenue generation. But 70% to 80% of their expenses is operating expenses, which we’re now focused on how do we get those down, so both their customers benefit and so they benefit as well.

Jim Grubb – Chief Demonstration Officer, Cisco

That’s right. Now using any mobile device, and we support all the mobile operating systems, we can do things like rotate the device and then the program guide now becomes available on the device here. So for example, if I wanted to change a channel I can just touch one of these channels. I can drag it up to my TV, I get a little preview. And I can let go and it changes the channel.

Let’s show you some of the other more advanced features, though that you get when you have profile. So what we’re going to do now is I am going to scroll up here and we are going to scroll to my profile, for example. So we’ll go over here and we will login with my profile, all right. And now when I scroll down you’ll notice that the channels now are the channels that I watch the most. So here is my James Bond movie.

So if I click here to watch that James Bond movie, for example, bring it full screen, I want to show you couple of the advanced features. So for example, let me just click here and I am going to click on shopping mode. And when I do that I get a notice on my mobile device to rotate the device. So I am going to go ahead and rotate it. When I rotate it, I get synchronized video, but it shows tags, for example, with the clothing that the people are wearing. So I might be able to interact and purchase those things.

John Chambers – Chairman and CEO, Cisco

So almost the other extreme to what SARA did earlier in the demo – the ability to basically, we see something we like, take it out.

Jim Grubb – Chief Demonstration Officer, Cisco

That’s right. Exactly. So I can run through the timeline of the movie and maybe there’s is the sports car here, for example, that I might want to purchase and –

John Chambers – Chairman and CEO, Cisco

I love it when you spend money.

Jim Grubb – Chief Demonstration Officer, Cisco

I just click on it. And it even shows me a map where to buy in the area here.

John Chambers – Chairman and CEO, Cisco

And probably the service provider gets the lead –

Jim Grubb – Chief Demonstration Officer, Cisco

Absolutely. I will need a raise, though, John, if I am going to buy this car.

John Chambers – Chairman and CEO, Cisco

Depends on how the demo continues.

Jim Grubb – Chief Demonstration Officer, Cisco

All right. There’s really a couple of other features. All right. I am going to go back up and this time we are going to scroll in, this we’re going to log into your profile, John.

John Chambers – Chairman and CEO, Cisco

Okay. Now this is very dangerous, Jim.

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Jim Grubb – Chief Demonstration Officer, Cisco

So you know, this is just see – we are just going to see your favorite movies and like that.

John Chambers – Chairman and CEO, Cisco

Okay.

Jim Grubb – Chief Demonstration Officer, Cisco

And I will scroll over and we’ll go ahead and choose you here. And we’re going to start to show you a look at your — that’s one of your favorites right there – the Hangover movie, filmed right here in Vegas as a matter of fact.

So we watched that movie button. Let me go ahead and double-click on it. And I am going to show you an advanced feature called “map the movie”. So this is where we start to bring the geocoding of the location where this movie was shot into a map that the user can experience. So let me just scroll over to “map your movie” and we’ll just click on that. And now again I get a message to rotate my iPad here, and I’ll go ahead and rotate it. And we get a 3-D map and you’ll see – you will notice that these are the clips of the movie placed in 3-D along the strip where they were shot. And if I want to watch that clip I can just click on it and it automatically brings it onto my television set. So very interesting 3-D mapping capabilities.

Now as we talk about interacting with the Internet of Everything and here at the show there is a lot of home automation where we have some Internet connected lights and thermostat and home entertainment system and the locks in the house here. Well, maybe as you’re getting ready to settle down and watch your movie, you want to control all of those things at once.

So what I am going to do is just scroll down here to set and we will set Cinema mode. So when I click here you will see that AV receiver changes into a cinema mode. The lights will dim. The thermostat might adjust the temperature in the home and even the doors get locked. So I am ready to go to my movie.

John Chambers – Chairman and CEO, Cisco

So the real power is really the connectivity of a mall not being connected but its ability to produce outcomes or results and entertainment together.

Jim Grubb – Chief Demonstration Officer, Cisco

That’s right. That’s our demonstration for today, John.

John Chambers – Chairman and CEO, Cisco

Jim, excellent job. You brought it home for me. Thank you.

Making this happen for each of us as humans and to bring this to life with everyday person, so important to both us, as a company and I think to our industry and the global opportunities. The ability to take a concept like big data or the ability to think about what this means in terms of how the Internet of Everything comes across is truly a tough art.

And yet one of the best phenomenal storytellers I’ve ever met is Rick Smolan. And if you watch what Rick has been able to do as a photographer at Time, at Life and National Geographic and you probably know Rick from the Day in the Life series that he did. He takes very complex topics and is able to bring them down in a way through photographs, through storytelling in a way that we can grasp.

It’s a feather, it’s a tremendous honor today to invite the Rick out on stage. Rick, if you would you join us. We’ve known each other for a number of years. You bring us to life – so how do you take the complex topic like this – like big data and make it easy for people to understand and yet also practical to how it’s going to change their lives?

Rick Smolan – Author, The Human Face of Big Data

This Human Face of Big Data project was by far the most challenging we’ve ever done. We set hundred photographers around the world and over a two month period to try to capture this. And I have been trying to explain to people what big data as myself trying to understand it. And my 11-year-old walked into the kitchen when I was working late at night and said, “Dad, you keep saying big data, big data on the phone. What does that mean?” And I’m struggling at two in the morning, like how do you explain this to a 11 year old?

And I said, “Just imagine if you’ve been looking at the world through one eye in your entire life and scientists invented a way for you to open up the second eye, which again is not more data, not more vision, you’re getting a different dimension.”

He thought about this for a second. He said, “Dad, so would scientists let me open up the third eye to four and thousand eyes. If you are a 11-year old with thousand eyes it’s very cool.” And I said, “That’s exactly what’s happening for the first time in human history. We’ve all become human sensors. Our smartphones, our jawbone devices, our credit card transactions, or Google searches, we’re getting a three-dimensional matrix. It’s like watching the nervous system. And you can see the spark go off in eyes when he heard that.

John Chambers – Chairman and CEO, Cisco

So you described it in a way that even a 11-year old or perhaps 11-year old – because he’s got more imagination, can understand when you suddenly get this input from certainly different sources it changes everything you do.

Rick Smolan – Author, The Human Face of Big Data

Yeah. I mean one of the things happening right now is that we discovered that the average person in Las Vegas or Tokyo or New York City in one day is now being exposed as much information in one day as our ancestors in the 15th century were exposed to an entire lifetime. One-day. It’s a straight vertical line.

John Chambers – Chairman and CEO, Cisco

So what a baby – occurs in the first day of the baby’s life is more than prior generations saw in their lifetime.

Rick Smolan – Author, The Human Face of Big Data

We actually discovered another statistic I thought was amazing. And in the first day of a baby’s life, the human race is generating 70 times the amount of information contained in the Library of Congress. Again another straight vertical line. We’ve never been able to affordably collect this data since the way we are doing now and be able to make meaning of it and use it in ways to change our behavior.

John Chambers – Chairman and CEO, Cisco

You know, when I listened to you and you are a great storyteller and – I almost open up my notebook and take notes as we go. What I found so impactful was how you took an example like the terrible earthquake that occurred in Japan and how that country prepared for it ahead of time and it could’ve been much worse if they hadn’t done this. But then how you take it to the next step and how you take a very expensive project and all of a sudden say, here is how you can replicate it by literally connecting devices with the right information to get the outcomes –

Rick Smolan – Author, The Human Face of Big Data

This is the first inning story. When this terrible earthquake happened in Japan, we all heard about it. We saw it on TV. But one of the statistics I heard in few places was actually on [inaudible] marketplace. He said that 15 seconds before the earthquake occurred – before the earthquake occurred, every bullet train, every factory in Japan was brought to a halt. The Japanese spent $500 million over 15 years since the Kobe earthquake installing a dedicated hardwired very expensive system that saved tremendous numbers of lives.

But then I heard even more fascinating story which is that a group of entrepreneurs in Palo Alto, when they were looking at their computers, their laptops and they said, every laptop has an accelerometer in it. So if your kids are running through the kitchen and they trip over the court and your computers on the way to the floor, it knows it’s falling, it lifts ahead. So your computer knows it’s falling because accelerometer lifts the head off the platter if it had to save your data.

They said what if we utilized that same sensor. When people go to bed at night, and all of our computers are plugged into the Internet, just run our program Quake-Catcher and now you have a ubiquitous crowd sourced, completely free global early earthquake warning system. And people just do need to help each other. No financial foundation to it. I love this.

John Chambers – Chairman and CEO, Cisco

It’s interesting to watch. And Rick, where people can go to learn more about this and maybe we can also comment that underneath each one of the chairs there is a copy –

Rick Smolan – Author, The Human Face of Big Data

Well, actually we decided to leave, to put in at the doors. So as we leave there is a copy of our book The Human Face of Big Data which I know a lot of times when you guys come to conferences, you leave half of the stuff that people give you in the hotel room. This is a book that your kids and your spouses will love because it makes very very understandable.

But two other things. One is thanks to Cisco, we actually created an iPad app – The Human Face of Big Data iPad app and it won the Webby for best educational app of the year. And we made it free for the month of January to all of you and anybody watching online.

And then finally, when you take this book home, those of you that know the Harry Potter movies and you are on the newspaper, you can actually talk to the people. And there is a still photograph of a video. So this is the first world’s first Internet enabled book. So there’s 20 places in the book where you can point your smart phone or tablet the person in the photograph turns around and talks to you. There is a free app on the back of the book. It tells you how to download it. And it is really fun and I think that we needed to have microprocessors to build computers, computers to build the Internet.

This new world of interconnected devices can have a much bigger effect than internet by itself. And I agree with you I think 2014 is the year we’re all going to look back, and I am saying that’s the year everything started to change.

John Chambers – Chairman and CEO, Cisco

Rick, it’s a pleasure. Thank you for being with us today. Thanks for being the human aspect to it.

You know when you think about what we talked about today, there are only a couple key takeaways really as you leave this session and imagine what is possible. And remember where you were a year ago and how fast things have changed in this one year.

When you think about how this is going to change things, don’t think about it in terms of connectivity. Think about how people with process with data will make better decisions and the ability for IT to suddenly think in terms of simplicity and speed and security and seamlessness and ability to do it very smart.

It’s almost a flywheel effect whether you listen to Ralph or Toni or Rick, or SARA as well that as you do these applications and you tie them together the power is much more each time you add others to it. But it requires an architectural approach to it. This will be inflection point as Rick said in 2014. It will result in looking back 10 years from now that the impact of the Internet from the time of its inception to today, the Internet of Everything will have 5 to 10 times that impact.

If I’ve done my job right today along with my guests, you begin to see why we see this inflection point occurring and you begin to see us put real meat and substance behind it. And what we have to do differently to be able to achieve this. You will see Cisco if we do our job right catapult this capability to truly partner around the world but become the number one IT company which I believe we are going to do.

You will see us continue to make investments in this area in a $100 million investment fund going into startups that help these ideas of Internet of Everything to life. You will see us put innovation centers around the world with the first four locations being in Germany, in Rio, in Toronto, in Songdo in Korea. The ability to in these innovation centers show what is possible to the citizens, to the governments, to the business in that part of the world.

Next Frontier – Healthcare

The next frontier that we will probably talk about a year from now will be around healthcare. And to just give you an idea, healthcare has never had productivity increases in my lifetime. And yet imagine what occurred in Sichuan, China with the terrible earthquake that occurred there in 2008. And what they did is they took a disaster and suddenly realized it brought their healthcare system to its knees.

Fast forward to today partnering very tightly with Cisco and with investments from our side in a big way, you suddenly had completely transformed healthcare for the whole Sichuan province. You suddenly instead of people in the remote locations never seen a doctor in their lifetime, they have access to over 66 organizations helping them with their healthcare – 32 smart hospitals, mobile clinics and telehealth networks. The ability suddenly for a person that couldn’t see a doctor five years ago to be able to see the best specialist anywhere in China and around the world.

And it’s about how do you combine many of the concepts today that we talked about to really get the outcomes that you want to the citizens. Today we’ve only talked about a small sliver if you will of the possibilities. I want you to think about as you leave how do you take many of the technology concepts that are being talked about in this conference such as the Internet of Everything, cloud, mobility, big data, how it changes lives and think what is next.

And think again not how fast has it moved in the last year but how fast has it moved since we did the first hosting of the Internet of Things Global Forum in Barcelona just in October this year. And when you think what will be the topic for this time next year I can tell you already what it’s going to be. It’s going to be about digital countries. The ability of a country to completely transform itself and Israel will probably be the best example of it where you have one of the most advanced technology countries in the world, the most independent in many many ways. And when they begin to look at their key opportunities and challenges facing the country such as job creation, economic increases, the ability to include the majority of their population which is 20% of the population in high tech.

The ability to completely transform healthcare and education and innovation cycle for the number two start-up country in the world in terms of new IPOs and they literally are aligning with Cisco in almost every single move they make. It’s our ability to transform citizens’ lives, business lives and global competitiveness and our focus on becoming much more outcome focused with our partners and with our key customers.

But you want to think about this being perhaps – I’ve always talked about the Internet education being the great global equalizers. This is going to take this to a whole new generation. It will affect everyone’s life in the world. It will affect the economies of countries, job creation, and even SARA.

I want to thank you for joining us today. Have a great day. Thank you very much.

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