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The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (
StreetAuthority) -- The world economy may be struggling to recover from the depths of the Great Recession, but there are still pockets of the market that are seeing explosive growth. Demand for electronic gadgets held up amazingly well during the credit crisis, which suggests consumers consider their smartphone or tablet computer necessities along with food and shelter. In fact, the housing bust demonstrated that shelter isn't worth all that much these days.
And it isn't actually the hardware that people crave, but rather the content that their connection to mobile devices provides. Data, in the form of email, texting - and, increasingly, multimedia from the likes of
Netflix(NFLX) -- are driving explosive growth in Internet content and the fixed and wireless technology that route across the globe.
This growth shows few signs of abating. Networking giant
Cisco(CSCO) effectively controls the market for Internet Protocol-based networking and predicts an 18-fold jump in Internet data traffic by 2016. Specifically, it expects an eventual traffic rate of 10.8 exabytes per month, or 130 exabytes annually. To put that into some additional context, this equates to 33 billion DVD downloads, and literally quadrillions of music and text downloads.
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Without fully understanding the level of traffic that equates to, I'm confident that means a rapidly growing amount of routers, switches and optical networking gear will be needed. Cisco sells billions of dollars of these products each year. The company reported total revenue of $43.2 billion last year, but it still has room to grow.
Last year, Cisco was criticized for focusing on its "new products" category, such as video that connects households and its Linksys-branded routers for the consumer market. It admittedly took its eye off the ball and lost some of its competitive edge in the bread-and-butter routers and switches that accounted for $20.5 billion, or 47.4% of last year's total revenue.
But in relatively quick fashion, Cisco shuttered or jettisoned a number of lagging divisions, such as the Flip video camera device. CEO John Chambers characterized it as one of the most transformative years ever at Cisco and committed to refocusing on the core networking operations. He also ruthlessly cut more than $1 billion in annual costs and initiated a dividend payment to shareholders to prove that Cisco will be more mindful of steady profit growth and willing to share it with loyal investors.