Service Provider Strategy Update

ServiceService ProviderProvider StrategyStrategy UpdateUpdate Bob McIntyre, SVP & CTO

GAAP RECONCILIATION

During this presentation references to financial measures of the Company will include references to pro forma financial measures. Cisco provides a complete reconciliation between GAAP and pro forma financial information on our website at www.cisco.com under “About Cisco” in the “Investor Relations” section. www.cisco.com/go/gaap_recon

FORWARD-LOOKING STATEMENTS

This presentation contains projections and other forward-looking statements regarding future events or the future financial performance of the Company, including future operating results. These projections and statements are only predictions. Actual events or results may differ materially from those in the projections or other forward-looking statements. Please see the Company’s filings with the SEC, including its most recent filings on Forms 10-K and 10-Q, for a discussion of important risk factors that could cause actual events or results to differ materially from those in the projections or forward-looking statements.

Cisco/SACisco/SA IntegrationIntegration BroadbandBroadband RevolutionRevolution ServiceService ProviderProvider MarketMarket DriversDrivers

BusinessBusiness ModelModel ResultsResults RealityReality CheckCheck What’sWhat’s Next?Next?

Video BSS / HEs Control Platform OSS VoD STB VoC / Connected NoC IP NGN Network Home

SystemSystem IntegrationIntegration Order-to-BillOrder-to-Bill

Video IP - NGN Home Networking

VideoA digital set-top is BSS / HEs Control Platform OSS VoD a network edge routerSTB … VoC / Connected NoC IP NGN Network and the “network Homeedge”

is nowSystemSystem in IntegrationIntegration the home! Order-to-BillOrder-to-Bill - Bob McIntyre

Video IP - NGN Home Networking

consumers

applications & services

devices

networks & systems

service providers

content providers

Increase revenue Higher ARPU Subscriber Growth

Decrease of churn Competition-driven $

Decrease of OPEX People and cost Customer Service

Bandwidth One HDTV movie = One YEAR of household Internet usage ! 70+ million broadband households Content 1+ million international channel subs (Dish) 120+ million video downloads last MONTH on YouTube.com HDTV 150+ HD channels in CY2007 50%+ of US households CY2007 Time Shifting Over half of all TV watched “time shifted” 80%+ of DVR users skip ADs Voice Cable Operators have 8.0+ million residential voice subscribers

Today’s Rate: 2.5-3.0 Billion Streams/Year

Source: AT&T analyst presentation, January 31, 2006

African Arabic Armenian Chinese Farsi French

ABN America - $14.99/mo. 15 channels - $39.99/mo. Armenia TV - $14.99/mo. 17 channels - $29.99/mo. 3 channels - $32.99/mo. 3A Telesud - $14.99/mo.

Al Jazeera Kuwait TV

German Greek Israeli Italian Japanese Korean

1 channel - $14.99/mo. 6 channels - $36.99/mo. Israeli Network - $19.99/mo. 2 channels - $12.99/mo. TV Japan - $25.00/mo. 4 channels - $36.99/mo.

Polish Portuguese Russian South Asian Tagalog Urdu 4 channels - $38.99/mo. TV Globo - $19.99/mo. 2 channels - $24.99/mo. 6 channels - $49.99/mo. 1 channel - $14.99/mo. 3 channels - $34.99/mo.

Estimated 1 million subscribers now to international tiers with strong ARPUs © 2007 Cisco Systems, Inc. All rights reserved. Cisco Confidential 12 New and non-traditional competitors are expanding their presence into consumer video and voice

$84.00 Voice Baseline Revenue per $2.75 Data Cable Subscriber / Month $76.14 $2.11 $14.43 Other Video $68.54

Basic Video $1.90 $11.34 $61.07 $8.54 $1.59 $53.19 $5.67 $0.89 $46.59 $27.18 $2.34 $24.53 $43.38 $0.35 $40.17 $21.53 $0.10 $0.94 $19.12 $37.91 $0.03 $0.49 $17.08 $0.02 $35.04 $0.13 $14.96 $33.19 $33.46 $32.35 $13.87 $31.86 $12.22 $29.16 $30.61 $11.41 $10.63 $10.96 $10.14 $11.24 $10.74 $11.40 $11.55 $39.63 $36.56 $38.15 $32.89 $34.70 $28.92 $30.34 $26.48 $27.79 $23.05 $24.41 $20.62 $22.50 $21.61 $17.61 $19.21

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Source: Kagan Cable Financial Factbook, Kagan Cable Futurecast

Cumulative # of HDTVs in U.S. Households (M) 70 64.1

50 47.1

40 32.9

HDTVs in HHs (M) HHs in HDTVs 21.1 20 12.6

10 6.6 3.4 0.4 1.5 0 Calendar Year 2000 2001 2002 2003 2004 2005 2006 2007E 2008E

Note: Data derived from CEA forecast of annual factory-to-dealer Digital TV shipments

Quarterly Digital Penetration (Top 10 U.S. and Canadian MSOs) 90%

80% Cablevision Comcast

70% Time Warner

Charter 60% Cox Time Warner/Bright House Comcast Cablev ision Charter Rogers 50% Cox

Digital Penetration % Penetration Digital Rogers

Shaw 40% Videotron Mediacom Br ig h t Hou se

Shaw 30% Media com

Videotron

20% Calendar Quarter 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07

Source: MSO earnings calls and financial reports, S-A estimates

© 2007 Cisco Systems, Inc. All rights reserved. Cisco Confidential 16 Operators are looking for Customer Satisfaction …to reduce churn 90% 85% Overall Satisfaction with Service Provider 80% 75% 78% 70% 74% 65% 68% 60% 55% 57% 50% 51% 45% 40% Analog Digital VOD DVR DVR & VOD

Source: CTAM research conference

© 2007 Cisco Systems, Inc. All rights reserved. Cisco Confidential 17 Operators are looking for Customer Satisfaction …to reduce churn 90% 85% Overall Satisfaction with Service Provider 80% 75% 78% 70% 74% 65% 68% 60% 55% 57% 50% 51% 45% 40% Analog Digital VOD DVR DVR & VOD

Source: CTAM research conference

© 2007 Cisco Systems, Inc. All rights reserved. Cisco Confidential 18 Reality Check… Video drives Architecture and Bandwidth for Next Generation Networks Renewed excitement about television - HDTV and time-shifting Path to NGN is clear – Cable operators extend existing investment in HFC New technologies driving upgrade cycle Telco IPTV deployments happening now…

IPTVIPTV

© 2007 Cisco Systems, Inc. All rights reserved. Cisco Confidential 19 Reality Check… Video drives Architecture and Bandwidth for Next Generation Networks Renewed excitement about television - HDTV and time-shifting Path to NGN is clear – Cable operators extend existing investment in HFC New technologies driving upgrade cycle Telco IPTV deployments happening now… So what are Service Providers doing about it? IPTVIPTV

BandwidthBandwidth EnhancementEnhancement ContentContent DeliveryDelivery SystemsSystems IPIP NextNext GenerationGeneration NetworksNetworks

EnhancedEnhanced ApplicationsApplications CommercialCommercial ServicesServices TargetedTargeted AdvertisingAdvertising

1000000 ADSL2+/VDSL available 100000 DOCSIS Introduced DOCSIS 3.0 10000

Moore's 1000 AOL Growth FiOS Law Explosion Prediction 100 Actual PIR 10 First Proprietary Cable Modem 1 Hayes Modem introduced 0.1

0.01

87 90 92 12 14 982 985 1 1 19 19 19 1994 1995 1997 1999 2000 2002 2003 2004 2006 2008 2010 20 20 Y Y Y Y CY CY CY CY CY CY CY CY CY C C C C CY CY CY CY CY

Example: is ol ap LA Local Content tle ne at in Se M Available in Philly P or n tla to nd s o B

a ah m O ene Eug N e n w to de Y en g er o m O v rk ra en ac D C P S l h ev ila lis de po e lp a l hi ian a a nd n M I d c Le an e s Ri Jo ch n Albuquerque m a C on S le h d il a v rlo h t s te LA a N rd A tfo tla ra nta St s la al D ile ob e M e ss so ha a la l P al Cisco 7600 E T i m ia Cisco CRS-1 M Transparent Consumer Experience

SA Encoders Residential Hub Primary Vault Linksys Digital Content SA QAM TV Video Home Manager Streamer Headend Router Digital CDS Manager Headend

Regional Network Backbone Network

CRS-1 uBR 4500 or 7600 Router CRS-1 Router H CMTS Series F SA STB or C DVR

SDV Server 4500 or 7600 CRS-1 CRS-1 Series Router Router ISR Router

SA Encoders

6500 Secondary Series Vault ISR Digital Content Video Manager Router Headend Digital Business Headend

Morning—Commute Day—Office

Use Phone as a Wallet Watch TV on Train, Program Conduct TelePresence and Ticket DVR for Tonight Meeting

Evening—Home and About Town Child’s Game and Update Find Child’s GPS Watch Shows on Demand, Virtual Community Pages Location on TV Answer Video Call on TV en Route Home

Interactive Video systems are not “Easy”

End-to-end Interactive Applications OS and CA SFA Vision System Set-top

Interactive Video systems are not “Easy”

End-to-end Interactive Applications OS and CA SFA Vision System Set-top

Cheap New Set-top Entrants

Interactive Video systems are not “Easy”

End-to-end Interactive Applications OS and CA SFA Vision System Set-top

nal Mid H m itio dle Cheap ea te n war d s io New Cond ss and e en Sy at e O Set-top d gr Acc S te In

Entrants Applications

Video Systems Integration Skills are Critical…

Joysticks Portable IP/Video Cell Media 802.11n Phones Player Web Cameras

Digital Camcorders Media Gateway • Protected content distribution Media Center both inside and outside the • PC connectivity for music, home photos, and home video •wired • Advanced user navigation •wireless Next Gen Platform options • Personalized content access • Advanced interactive and •voice recognition and navigation converged services •extended search •voice navigation DVR+ • Expanded content offerings • Integrated comm options • intelligent agent •DVR with advanced codecs •VoIP • Advanced DVD recording and • HD-DVR • Advanced IPG’s (search, • Videoconferencing applications loading • Multi-room DVR VOD integration) •wireless for cellular • Advanced HD decoding • DVD recording • Content downloads to set- • Home automation options • Advanced gaming capability top or hard drive

Q&A slide

QQ andand AA

These presentation slides and the related conference call contain forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, statements regarding future events (such as the development of our markets, the future of networking, Cisco’s strategy and positioning, and our ability to foresee market transitions) and the future financial performance of Cisco that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including: business and economic conditions and growth trends in the networking industry and in various geographic regions; global economic conditions and uncertainties in the geopolitical environment; overall information technology spending; the growth of the Internet and levels of capital spending on Internet-based systems; variations in customer demand for products and services, including sales to the service provider and other customer markets; the timing of orders and manufacturing and customer lead times; changes in customer order patterns or customer mix; insufficient, excess or obsolete inventory; variability of component costs; variations in sales channels, product costs or mix of products sold; our ability to successfully acquire businesses and technologies and to successfully integrate and operate these acquired businesses and technologies; increased competition in the networking industry; dependence on the introduction and market acceptance of new product offerings and standards; rapid technological and market change; manufacturing and sourcing risks, including risks relating to our continued transition to a new manufacturing model; product defects and returns; litigation involving patents, intellectual property, antitrust, shareholder and other matters; natural catastrophic events; a pandemic or epidemic; achievement of the benefits anticipated from our investments in sales and engineering activities; our ability to recruit and retain key personnel; our ability to manage financial risk; currency fluctuations and other international factors; potential volatility in operating results and other factors listed in Cisco’s most recent reports on Form 10-K and Form 10-Q. The financial information contained in these presentation slides and the related conference call should be read in conjunction with the consolidated financial statements and notes thereto included in Cisco's most recent reports on Form 10-K and Form 10-Q, each as it may be amended from time to time. Cisco's results of operations for the three and nine months ended April 28, 2007, are not necessarily indicative of Cisco’s operating results for any future periods. Any projections in these presentation slides and the related conference call are based on limited information currently available to Cisco, which is subject to change. Although any such projections and the factors influencing them will likely change, Cisco will not necessarily update the information, since Cisco will only provide guidance at certain points during the year. Such information speaks only as of the date of the presentation slides and the related conference call.