Cisco Predicts Internet Traffic Will Quadruple

June 15, 2010
Networking Index a positive sign for tech giant

Cisco Systems Inc. expects average monthly Internet traffic in 2014 will be the equivalent to 32 million people streaming "Avatar" in 3-D continuously for the entire month.

The company predicts annual global Internet traffic will grow fourfold by 2014 at a compound annual growth rate of 34%, according to its Visual Networking Index released June 2.

Cisco says annual global IP traffic will exceed three-quarters of a zettabyte (767 exabytes) in four years. Global IP traffic grew 45% during 2009 to an annual run rate of 176 exabytes per year, or 15 exabytes per year. By 2014, the company expects average monthly traffic will reach 767 exabytes per year, or 64 exabytes per month.

That could be good news for the San Jose, Calif.-based networking manufacturer. In March the company unveiled the CRS-3 Carrier Routing System, which Cisco says is "designed to serve as the foundation of the next-generation Internet." The CRS-3 is Cisco's latest effort to capitalize on a "market transition" -- in this case, the surging popularity of video, mobile devices, collaboration and online services such as virtualization, Kelly Ahuja, Cisco's senior vice president/general manager of the SP Routing Technology Group, told IndustryWeek.

Cisco Systems Inc..
At A Glance

Cisco Systems Inc..
San Jose, Calif.
Primary Industry: Computers & Other Electronic Products
Number of Employees: 65,500
2008 In Review
Revenue: $39.5 billion
Profit Margin: 20.36%
Sales Turnover: 0.67
Inventory Turnover: 10.99
Revenue Growth: 13.22%
Return On Assets: 15.10%
Return On Equity: 25.58%

"This is kind of a critical time for where the network is and where the network is headed," he said. "Our goal is to use the network as a platform for creating those experiences."

The company looks to build off of a solid third quarter during which the maker of switches and routers for Internet and wireless networks posted better-than-expected results.

Cisco's profit rose 63% to $2.2 billion, the company reported in May. Revenue increased 27% over the year-earlier period to $10.4 billion.

Cisco said it expected revenue growth of between 25% and 28% in the fourth quarter with the recent acquisition of Norwegian videoconferencing company Tandberg contributing about $200 million in revenue, according to Agence France-Presse.

In a conference call with analysts, Chief Executive John Chambers said he expected Cisco to continue to add jobs this year after already adding 1,000 in the third quarter, AFP reported.

"You'll see our expenses grow at a faster rate," he said in the AFP report. "We believe the recovery is accelerating, but no knows how strong it will be or for how long it will last."

About the Author

Jonathan Katz | Former Managing Editor

Former Managing Editor Jon Katz covered leadership and strategy, tackling subjects such as lean manufacturing leadership, strategy development and deployment, corporate culture, corporate social responsibility, and growth strategies. As well, he provided news and analysis of successful companies in the chemical and energy industries, including oil and gas, renewable and alternative.

Jon worked as an intern for IndustryWeek before serving as a reporter for The Morning Journal and then as an associate editor for Penton Media’s Supply Chain Technology News.

Jon received his bachelor’s degree in Journalism from Kent State University and is a die-hard Cleveland sports fan.

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