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Cisco helps build prototype for instant cities
June 2, 2010 | Chris Payatagool
By John Boudreau via MercuryNews
INCHEON, South Korea -- It's a product like no other -- a complete city for a million people with over 20,000 advanced videoconferencing systems called Telepresence.
As tens of millions of people across the developing world migrate from the countryside to new cities, Cisco Systems is helping build a prototype here for what one developer describes as an instant "city in a box." Cisco is wiring every tech nook and cranny of the new city, making it one of the most technologically sophisticated urban centers on the planet.
Delegations of Chinese government officials looking to purchase their own cities of the future are descending on New Songdo City, a soon-to-be-completed metropolis about the size of downtown Boston that serves as a showroom model for what is expected to be the first of many assembly-line cities. In addition to state-of-the-art information technology, Songdo will emit just one-third of the greenhouse gasses of a typical city of similar size.
Cities of a million-plus population are popping up across the developing world, but the foremost market for the prototype here is China, where a massive demographic shift from rural to urban already is under way, requiring hundreds of new cities.
"They come in here and say, 'I'll take one of these,' '' said Richard Warmington, the former head of Hewlett-Packard's Korea operation and Saratoga resident who is now president of Chadwick International School, which is setting up a campus in Songdo.
Cisco, the key tech partner for the development, get giddy talking about what could be a $30 billion business over coming years for the San Jose networking giant. Just a year ago, the usually button-down Cisco CEO John Chambers engaged in a night of "love shots" -- locked elbow drinking toasts -- with President Lee Myung-bak to seal the Songdo deal Korean style.
It's easy to see why Cisco is intoxicated with the possibilities: According to a study by investment bank CIBC World Markets, governments are expected to spend $35 trillion in public works projects during the next 20 years. In Songdo alone, Cisco sold 20,000 units of its advanced videoconferencing system called Telepresence -- a billion-dollar order -- almost before the ink had dried on the contract, said developer Stan Gale, the chief visionary of the project.
"Everything will be connected -- buildings, cars, energy -- everything," said Wim Elfrink, Cisco's Bangalore, India-based chief globalization officer. "This is the tipping point. When we start building cities with technology in the infrastructure, it's beyond my imagination what that will enable."
The audacious plan is rising up from former mud flats along the Yellow Sea. Cisco and New York City-based Gale International hope the privately funded $35 billion Songdo project leads to at least 20 similar developments in China, India, Vietnam and other countries in coming years. Much of Songdo will be completed in 2014.
"Five hundred cities are needed in China; 300 are needed in India," said managing partner Gale, an exuberant, arm-waving developer who believes Songdo will be his legacy.
The project calls for wired everything -- an urban center where networking technology is embedded into buildings from the ground up and every home, school and government agency is equipped with sophisticated Telepresence video technology -- what in Cisco mantra is called Smart+Connected Communities.
The idea was 10 years in the making for Gale, though Cisco signed on just two years ago. The concept was inspired not just by mass demographic shifts but also new technology that can significantly reduce energy use and pollution while transforming how people interact with the world around them.
For Cisco, Songdo represents more than a chance to sell hardware. The San Jose company envisions its technology as the connector for all aspects of urban life: government services, utilities, entertainment, health care, education. The company envisions new business models built around its Telepresence technology -- say a yoga class beamed into living rooms or medical checkups done remotely. All of these would be managed through a single Internet network, and Cisco would collect a recurring fee for maintaining the services, almost like a utility.
"It will be like paying a maintenance fee once a month," said Christopher Khang, a Cisco vice president based in Singapore. "It's a radically new business model for the company."
Building this technology into new construction adds relatively little to the overall construction costs, he said. "But the benefits are going to be huge. I believe we are the only company that can provide this holistic (technology) environment."
It looks good on paper. But will those Chinese officials buy this tech utopian vision?
"It seems a little speculative," Broadpoint AmTech analyst Mark McKechnie said. Still, he added, "If you want to be around, you have to have a 10-year plan. If this doesn't develop, at least they'll learn something new they can apply to different businesses."
Risk in grand plans
There's also a question of how many whistles and bells developing countries are willing to pay for. For some local officials from China and elsewhere, Songdo, which has a 100-acre Central Park and Jack Nicklaus Golf Club, is a bit like visiting a luxury auto dealer when all you can afford is a Honda Civic.
Even Gale, who hired premier American architects to design the master plan and buildings, admits there are risks.
"This could be an international travesty if it goes wrong," said the developer, whose project is funded by South Korean investors. "It's the largest project between the United States and the Republic of Korea."
When Gale first dialed up Cisco with his project five years ago, it wasn't ready for such grand plans, Elfrink admitted. When it was approached again three years later, Cisco was ready to go.
That was about the time Saudi Arabia handed Cisco a contract to help create four new cities around the country, an overall $70 billion deal to jump-start a tech sector in a country awash in oil revenue.
Cisco, hoping to dominate in the new build-it-and-they-will-migrate business, has been enlarging its tech catalog in preparation.
It acquired Santa Barbara-based Richards-Zeta Building Intelligence, whose software enables building systems, from lights to air conditioning, to be managed over the Internet, making them more energy-efficient. Cisco invested in Australian startup Majitek to create a platform for delivering multiple services over a digital network. And the company's just-completed $3.4 billion deal to buy desktop videoconferencing maker Tandberg adds to its Telepresence business.
Now Cisco is using its Shanghai World Expo pavilion, which displays a compelling video detailing a totally linked city, to sell its technology. Government officials are then invited to hop on a plane for the hour-and-a-half flight to Incheon.
"There will be at least 100 new cities with a minimum population of 1 million each being built in China in the next three years," said Anthony Elvey who, as director of Cisco's Expo pavilion, gives tours to Chinese provincial officials, each hoping to outdo the other in creating an instant city that will attract job-creating investments.
That's like building a city with the population of San Jose virtually overnight.
So far, Cisco has signed deals with two Chinese municipalities. It will be the main networking infrastructure provider for Chongqing, which has a population of more than 31 million in southwestern China. And Cisco and Gale will provide a city-scale development in Changsha in Hunan province.
"These guys can snap their fingers and put all this infrastructure in place," Elvey said.
Contact John Boudreau at 408-278-3496.
New Songdo City at a glance
Location: beside the Yellow Sea in Incheon, South Korea.
Cost: $35 billion
Population: 250,000 residents
Footprint: 40 million square feet of office buildings; 35 million square feet of high-rise residential; 10 million square feet of retail; 5 million square feet of hotel space; 10 million square feet of public space.
It has a 100-acre Central Park modeled after the one in Manhattan, a Jack Nicklaus Golf Club and the tallest building in South Korea.
Architects include Kohn Pedersen Fox, HOK and Daniel Leibeskind, who drew up the blueprints for the new Twin Towers in New York City.
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