Cisco believes consumers want ads not price cuts

Networking giant Cisco has invested heavily in a major US ad campaign, believing brand recognition, rather than price cuts, will beat back new competition from makers of less-expensive gear.

Speaking at a conference yesterday, Cisco CEO John Chambers would not directly address the issue of possible price cuts, but he acknowledged the competitive threat and announced the $150m ad campaign. He also said Cisco will continue pushing for new partnerships.

"We won't just play defence, we will play offence as well," Chambers told investors at the Morgan Stanley Software Services, Internet and Networking Conference in Scottsdale, Arizona.

Cisco sells more routers and switches, used to direct Internet traffic, than any other company. But new manufacturers selling cheaper equipment have recently come on the scene, and analysts have said they believe Cisco will eventually have to take steps, including cutting prices, to deal with the lower-priced competition.

Ben Charny writes for News.com