Why Cisco Benefits From Apple's iPad (Update 1)

SAN JOSE, Calif. ( TheStreet) -- Apple's ( AAPL) new iPad, along with the slew of Google ( GOOG) Android-based tablets, spells big opportunity for Cisco ( CSCO), according to Robert Lloyd, the networking giant's executive vice president of worldwide operations.

"It means that the network does play, and will play, a critical role in opening up these devices into corporate IT," he said during an interview at Cisco's headquarters. "Our customers are saying 'How am I going to exploit that tablet innovation and use that in the enterprise?'"
Cisco sees opportunity in the new Apple iPad.

Cisco, which busted out strong second-quarter results last month, is rebounding from a difficult period in company history. After undergoing a massive corporate overhaul, though, Cisco is enjoying healthy growth in key areas such as switching and routing.

Cisco's switching revenue, which accounts for almost a third of total sales, climbed 8% year over year during the second quarter. The company's routing revenue, which makes up just under a fifth of Cisco's sales, also grew 8%.

Lloyd added that Cisco has seen improved demand for a number of its offerings since Apple kick-started the tablet revolution in early 2010.

"We have seen a huge amount of growth in our Wi-Fi business," he said, adding that tablets have also boosted Cisco's security sales."The network is more relevant than ever before, and we're really looking at that change in devices and explosion in mobility as a huge opportunity for Cisco."

Cisco, of course, has its own tablet, the business-focused Cius, although Lloyd said the device should not be compared to Apple's iPad.

"Don't confuse the Cius with a consumer tablet," he said. "It's a business device that's optimized not only for communications, but also for this increasing trend to mobility in the enterprise workplace."

Cisco unveiled the Cius last year, combining tablet functionality with telepresence, a form of high-end video conferencing, when hooked up to a docking station. The networker also debuted AppHQ, its Cius app ecosystem, which includes VMware ( VMW) View Client for desktop virtualization and Citrix ( CTXS) receiver for remote desktop access.

Cius, however, has been relatively low-profile at Cisco recently, particularly when compared to the company's UCS server technology. The tablet, for example, has not even been mentioned on the networking giant's recent quarterly conference calls.

Lloyd, though, reiterated Cisco's commitment to its business tablet.

"The Cius tablet is actually a purpose-built, enterprise class mobile device," he said in the interview. "It's a combination of a handset and a device that enables collaborative applications, optimized for video, optimized for an app store."

Apple's iPad, although initially aimed at consumers, is proving extremely popular in corporate America.

Speaking during the gadget giant's recent fiscal first-quarter conference call, Apple Chief Financial OfficerPeter Oppenheimer said that nearly all of the companies in major Fortune 500 markets are using the iPad to improve workflows, business processes and consumer interactions. The Apple finance chief explained that estate agent Coldwell Banker is using iPads to access sales presentations and view custom-built apps while showing houses to customers.

After a largely lackluster 2011, Cisco shares have climbed almost 9% this year. Shares of Apple, which recently hit a new all-time high, are up almost 34% over the same period.

--Written by James Rogers in New York.

>To follow the writer on Twitter, go to http://twitter.com/jamesjrogers.

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