Cisco Has 'Little Interest' in Selling Smart Phones

Cisco Systems Inc. Chief Executive Officer John Chambers said the company has "little interest" in selling its own smart phone, though it sees partnerships in that industry as a way to boost network demand.

Chambers said he is focused on working with Research In Motion Ltd., Apple Inc. and Palm Inc. to handle the networking required by smart phones, which are used to surf the Internet and download applications. The remarks signaled that Cisco wasn't in the market to acquire a smart-phone maker.

"We love anybody who loads up networks, and smart phones do," Chambers said today in an interview. "I see RIM, Apple and Palm as companies to partner with to help sell networks. I think they see us the same way."

Cisco, the world's biggest maker of networking equipment, acquired the maker of the Flip camcorder this year, pushing into handheld consumer electronics. That decision wasn't about acquiring a device -- it was more about getting technology that spurred the use of related software and networking, Chambers said today. The Flip plugs directly into computers' USB drives, making it easier for users to share video over the Internet.

"I have very little interest in phones," Chambers said in the interview, held during the company's analyst day at its headquarters in San Jose, California.

While Cisco may not be interested in the smart-phone market now, the Flip business will face increasing competition from those devices, said Shaw Wu, an analyst with Kaufman Brothers in San Francisco. Apple's iPhone already has camcorder features and other devices are adding those capabilities.

"In the near term, they probably don't need to be in the market, but longer term, they may have to," Wu said in an e- mail. "Their Flip camera business could come under pressure as that functionality gets incorporated into smart phones."

Cisco dropped 25 cents to $23.96 at 2:12 p.m. New York time in Nasdaq Stock Market trading. The shares had climbed 49 percent this year before today.

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