10/24/2005 -- During last week's three-day visit to the Indian sub-continent, CEO John Chambers announced that Cisco Systems Inc. planned to invest an additional $1.1 billion in India. This builds on top of Cisco's decade-old presence on the sub-continent and should result in a substantial expansion of Cisco India, which comprises five distinct verticals -- IT Services, Enterprises, Service Providers, Government and Defense, and SOHO/Consumer.

Analysts say the investment should also help shore up Cisco's position in the Asian market, where upstart vendors like China's Huawei have made inroads into some of Cisco's bread-and-butter markets. "This announcement ... [addresses] a broad spectrum of inter-linking activities that, when executed, will move Cisco further into the Asian markets, not as a U.S. company, but as a local-regional partner and employer," says Glen Hunt, a senior analyst for carrier infrastructure with consultancy Current Analysis.

The bulk of Cisco's investment ($750 million) is earmarked for R&D, while leasing and financial solutions ($150 million), venture capital funding for Indian start-ups ($100 million), and a ramp up of service and support functions ($100 million) will account for the rest, Hunt says.

Cisco's aggressive technology expansion and overseas investment isn't without risk, however, says Hunt. The company has made investments in other locales (such as Japan), with the result that it must now manage R&D and product development efforts in several far-flung locales. "Cisco's satellite operations could divert attention away from product leadership issues as competition continues its attack on Cisco dominance in the enterprise and key service provider markets," Hunt writes. "The various Cisco teams will be co-developing features for the same product lines; even assuming parity of development tools and environment, there will need to be an additional level management to keep new features from impacting existing ones and from spawning many versions of the same product except for ‘minor' feature differences." -Stephen Swoyer