Cisco's Vision for the City of the Future

Cisco has said the Internet of Things is maturing into a trillion dollar industry.

Jun 7, 2014 at 2:30PM

In the following video, Motley Fool analyst Eric Bleeker talks with Cisco's (NASDAQ:CSCO) Chris White, who is a general manager of Internet of Things sales at the company. 

One of the most exciting prospects around the Internet of Things is the idea of "smart cities." Researchers Frost & Sullivan have estimated that the global smart city opportunity will hit $1.5 trillion by 2020. Cisco has been actively working with numerous cities to make the connected smart city a reality.

Yet while there can be huge cost savings from making cities smarter -- anything from sensors to optimize trash collection to monitoring utility networks -- cities around the globe aren't exactly swimming in money to pay for massive smart city projects. Chris discusses Cisco's work with the city of Barcelona, and some challenges in bringing smart city technology to the market. 

A transcript follows the video. 

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Chris White: I don't know how well briefed you've been around our [Cisco's] Barcelona project -- do you know anything about the city of Barcelona?

Eric Bleeker: No, I do not.

White: Barcelona has been in bad economic shape. They used to be one of the most unprofitable cities in the world -- they're now one of the most profitable cities in the world. What they did is look at areas of their city where they lost a lot of money, and said could they improve efficiency and turn that into a revenue-generating opportunity?

Believe it or not, Barcelona has got smart parking, smart bus stations, and one that we're kind of amazed about -- they literally have smart garbage cans. I'll share with you the wackiest of those. Why on earth should anyone care about a smart garbage can?

One of Barcelona's biggest economic impacts is tourism. Smelly garbage cans, overflowing in beautiful areas of Barcelona is not good for tourism, so they literally have got sensors on their garbage cans, that track the amount of garbage and the amount of aroma they give off during the summer months. They change their routing of garbage pickup, based on where the garbage needs to be removed first.

You think about the tourist impact, but then think about the economic impact of the efficiency of their garbage truck system. All of a sudden, they're not doing the same route over and over again, and emptying what are empty garbage cans -- so they're saving fuel, they're being more efficient, and they're having a positive impact on the environment.

Parking is another interesting dynamic; 30-40% of city congestion is caused by people like you and I, driving around and around, trying to find that parking space. They have Internet-enabled the parking meter, so it's a sensor in the road.

You have an app, as you drive into Barcelona, and you go find the parking spot. The city automatically deducts the cost of parking, so they no longer have a bunch of meter maids walking around chalking tires.

They no longer have creative people like me thinking: "I don't have to put money in that meter. I can just nip into that bank and I'll never get caught." They don't have smart people like me challenging those tickets that I get written. So, parking as an example has turned what used to be a tremendous cost drain, into a profit center for that city.

These are some examples that we're just seeing the business side of the world finally look at technology as, "Boy, we can save money, improve productivity, and be more competitive" -- very candidly, just at a time where IT is under so much pressure because they haven't been working together.

Bleeker: I love all those use cases. What always strikes me as really interesting, though, is you're selling to unconventional organizations. You're maybe offering a big deployment to a company that does oil rigs, that traditionally IT hasn't been at the center of, or you're selling to cities where you've got these use cases, but sometimes it feels a little one-off.

Just as a follow-up from that question, Barcelona -- have you guys been able to take the learnings from that and sell it to other cities? How are we going to be able to scale these projects that often feel kind of custom-tailored to each city?

White: Eric, another great question. There's a couple of things we're doing, actually.

Barcelona, themselves, has got so much global interest, they're looking at setting up a consulting arm to help other cities around the world leverage the best practices, and do it faster.

We, at Cisco, have stood up a specialist organization that I'm responsible for globally, that helps have this conversation with the mayors of cities, with the VPs of manufacturing at the manufacturing plants ...

To your point, Cisco and other IT companies have spent an awful lot of time in the bowels of IT and with great relationships with CIOs. We're trying to do one of two things -- help IT repackage technology in a lot more business-friendly consumption model, or work with the line of business directly, and help them understand the benefit of what technology and IT can bring, to have an impact.

So, it is absolutely a change in what we call sales motion and engagement motion, to help scale some of this great impact we're seeing around the world.

Bleeker: Great.

Eric Bleeker, CFA, owns shares of Cisco Systems. The Motley Fool recommends Amazon.com, Apple, and Cisco Systems and owns shares of Amazon.com and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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