Has Cisco sewn up the enterprise?

At one of our Getting to Gigabit Town Meetings, a speaker wondered aloud about the gap in enthusiasm between vendors and customers regarding Layer 3 switching. For vendors, Layer 3 switching changes the enterprise game - it delivers a vast improvement in performance over traditional software-based routers at a dramatically lower cost. Rivals see Layer 3 switching as a way to ravage Cisco's high router margins and drive a wedge between Cisco and corporate customers.

But customers are more reserved. They're asking themselves whether it's worth embracing the new products now, or wait for Cisco to match what rivals offer.

If Cisco customers are willing to wait for a breakthrough such as Layer 3 switching, you have to ask: Has Cisco sewn up the enterprise?

Cisco thinks it has. While CEO John Chambers likes to claim that the company will never get arrogant, that his experiences at IBM and Wang taught him the dangers of believing your own PR, he seems to have forgotten that lesson of late. In speeches, he routinely discounts 3Com, Cabletron, Bay and others, touting Cisco's vastly higher market capitalization and research and development spending. He says Cisco has locked up the industry's top strategic partners. With its superior skill at acquisitions, Cisco can quickly fill whatever gaps may open up in its product line.

"We're positioned like no one else," Chambers told attendees at a Cisco briefing this past spring. "It's not to say we couldn't mess it up, but we're probably the only one in the industry that really controls our destiny in this Internet era."

Chambers and other executives say the company's real rival today is telephony equipment giant Lucent. Those two will go head-to-head in building the voice/data networks of the future.

The two companies will increasingly come to blows, particularly as Lucent expands its data network offerings. But Chambers' claim neatly dismisses current challengers - from top-tier suppliers such as 3Com, Bay and Cabletron to mid-size companies such as FORE Systems and Xylan. It leads you and the Wall Street types to believe that Cisco's only competition for your dollars is a relative newcomer just beginning to build its enterprise brand equity.

Rival CEOs bristle at the suggestion that Cisco has this thing locked up. Executives at upstart suppliers such as Extreme Networks and Packet Engines lick their lips, remembering the adage that pride goeth before a fall.

But what do you think? Has Cisco sewn up the enterprise? Or is Cisco getting too cocky?

John Gallant, editor in chief jgallant@nww.com