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Web 2.0 to lift productivity, says Cisco

The introduction of consumer-driven web 2.0 technologies into businesses is set to usher in a new phase of productivity growth that could surpass that achieved during the late-1990s internet boom, John Chambers, chairman and chief executive of Cisco Systems, has forecast.

“We are at the very beginning of the next phase of creativity, that will last, I think, a minimum of 10 years, probably 15 years,” Mr Chambers said in an interview with the Financial Times. “But it will have more impact because ... the power of [connecting] many to many allows you to do things at a dramatically different speed.”

The head of the world’s biggest maker of data networking equipment said social networks, collaborative websites like wikis, teleconferencing and other technologies that allow interaction on a large scale could change entire business models.

His comments come amid a period of intense interest in consumer-oriented social networking sites like MySpace and Facebook, which allow users to share pictures, videos and other messages online.

By allowing people within and outside companies to connect to each other and share information, Mr Chambers said, companies should be able to dramatically increase the pace of their business operations, enhance sales models and interact more productively with customers.

“While a lot of people say that’s very possible or even [probable], just like in 1996-97, there’s a hesitancy ... about taking risk by some of the established companies and that actually creates an opportunity for us,” he said.

In the late 1990s, the potential of internet-enabled technologies led Cisco briefly to pass Microsoft as the world’s biggest company by market capitalisation. But the dotcom boom proved unsustainable. After the bubble burst, Cisco’s shares lost more than 80 per cent of their value.

Mr Chambers acknowledged the bubble had resulted in an “overextended” stock market. But he said Cisco’s predictions about the internet’s impact on productivity had proven correct.

“Did the world get the productivity out of the internet? The answer is oh yes, many times over. Did it change business models? More than any of us anticipated, yes. The companies that didn’t get this transition are no longer here,” he said.

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