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A friend who has little technical background or interests asked about "this Cisco company" being valued almost as highly as Microsoft. Everyone has heard of Microsoft - the ads, the ubiquitous desktop logo, the court case news, the Bill Gates interviews, the Fortune wealthiest individual in the world. But Cisco?

I explained it thus. If you already know Cisco this may bore you to tears, or cure your insomnia. But it helped my friend so perhaps it might help another person.

The Internet is taking flight as the next global medium. As important as trains, cars, planes, boats, mail, phones, and television. Impacting how people interact with one another, how people/customers interact with companies, how companies interact with people, and how companies interact with one another. You shop through the Internet instead of in stores or with paper catalogs and phones. You send email instead of mail or voice messages. Companies organize their plans for production, distribution, and so forth through data passed through the internet. They also execute their operations with information passed through the internet.

Eventually most people, most companies, and most information will be available to most people and companies within seconds. Available in deep, involving, and interesting ways.

Now look at the growth of each of the old media. How each reached large portions of the population. For example, recall that the World Cup is viewed by 2/3 of the worlds humans. Today the Internet is accessed by maybe 1/60 of the worlds population. So we still can grow by maybe 40X in terms of people enfranchised.

We also are looking at changes in technologies that carry and switch. Faster speeds for the information when you don't see it, moving from computer to computer ... the large, invisible network. And faster speeds for the information you do see, so screens update faster and you can view things that require more data as a function of time (pictures, sounds, movies, and such). Also, as more services and people are out there, you are likely to spend more time using the Internet. Club meetings where the 20 members are scattered across the world. Things that are impossible now become possible, and thus will happen.

So more people using the Internet, and more data when they use it, and they use it more often. Lots and lots of growth.

And while you have heard of companies that run virtual stores and access facilities (e.g., Amazon.com, Yahoo.com), that is largely the skin. To dive into an anatomical analogy, the muscle, the nerve system, and the bones under it all come from companies you do not hear about. Sure, when the whole thing grows the parts you can see will grow. But you would expect the parts you don't see to grow.

And those parts are provided by largely unknown companies. Oracle is the second largest software company in the world, but few have ever seen their software directly. All those catalogs you look at ... likely the data is all stored in an Oracle database somewhere. Sun is one of the largest computer companies in the world. Ever seen one of their computers in a home? But if you use the Internet you would be hard pressed to get something without it traveling through a Sun computer.

Which leads to Cisco.

The Internet is a lot of wires. The wire from your computer goes out to the phone (or cable) company. And eventually another wire goes to the computer you are connected to. You ask for something and they send it. Little pieces of data are going back and forth. But that wire on your side does not go direct to that wire on their side. And at any moment in your browser you can put in another place you want to visit, and you are instantly there. Someone did not unplug one wire and plug in another. No, there are electronic switches all over. Big ones with many wires going in and out. Little ones. And wires from one switch go into other switches. They all work together so that the entire world wide Internet works.

And the company that makes many of those switch boxes is Cisco. They are growing as fast as the Internet. They seem to be one of the companies that will keep supplying parts for the Internet as it grows into the future. They are very, very dominant. They are very, very clever. They are very, very aggressive. And they are very, very well managed.

So you may never see a Cisco box, but they are out there, and proliferating like rabbits.

At which point my friend asked how to buy the stock.

:<)

Mr T
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