The 10 most powerful companies in networking

Industry-shaping technology visions, strong financials and market domination - these network vendors stand out among all others. Here we rank them, 1 to 10.

1. Cisco: Infrastructure might, network industry bellwether

Biggest announcement in 2003: True 10G switch. In April, Cisco released the Supervisory Engine 720, a module for the Catalyst 6500 family that brings these switches true10G-bit/sec performance. Before this, 8G was the max.

Financial track record:

Q1 FY '04 net income of $1.1 billion.

Q4 FY '03 net income of $991 million.

Q3 FY '03 net income of $987 million.

Q2 FY '03 net income of $982 million.

Power of numbers: No. 1 worldwide in Ethernet switching and enterprise/service provider routers. No. 14 on the Network World 200 (NW200), our annual list of the top 200 network vendors (click here).

What's on tap for 2004? Cisco will aggressively pursue the next billion-dollar infrastructure markets - storage, security and IP telephony - via internal development and technology acquisition.

Powerful 2003 customer win: Verizon selected the 12000 Series LATA core/service edge routers to support its national IP VPN network. Terms for the deal, announced in October, were not disclosed.

Acquisitions: In January, Cisco acquired Okena, an intrusion-prevention vendor, in a $154 million deal. In March, Cisco announced a $500 million deal to buy Linksys, for wired and wireless consumer/small office/home office devices; and SignalWorks, for IP telephony technology, in a $13.5 million deal. In November, it grabbed conferencing vendor Latitude Communications in a deal valued at about $80 million.

"We will not just play defense; we will play offense as well."

- John Chambers, CEO

2. IBM: A giant in every way

Biggest announcements in 2003: Mainframes, on-demand and grid. In May, IBM announced the T-Rex mainframe, its most powerful mainframe to date, and made yearlong additions to its on-demand IT services portfolio and grid computing applications, all of which positions it to dominate the competition for the next-generation data center.

Financial track record:

Q3 FY '03 net income of $1.8 billion.

Q2 FY '03 net income of $1.7 billion.

Q1 FY '03 net income of $1.4 billion.

Q4 FY '02 net income of $1.0 billion.

Power of numbers: No. 1 worldwide in network and system management software, relational database management systems, Java application-server software, portals and integration software, and mainframes. Plans to add 10,000 new jobs in 2004, according to CEO Sam Palmisano. No. 1 on the NW200.

What's on tap for 2004? Reorganization of its $13 billion software division around vertical industry product sets; more on-demand, utility computing wares across IBM's hardware, software and services businesses; and component versions of its middleware, starting with WebSphere Application Server.

Powerful 2003 wins: In February, IBM landed a 10-year, $2 billion outsourcing contract with auto-parts maker Visteon. In July, it convinced Lego to rip out its HP-based server and storage infrastructure and replace it with IBM products, terms undisclosed.

Acquisitions: In May, IBM acquired Think Dynamics for its automated server provisioning software; got content management tools from Aptrix in July; snagged the application porting services business of Sector7 in September, and gained mainframe database integration technology from CrossAccess in October. Terms for all deals were undisclosed.

"We are beginning to see signs that the economy has stabilized. . . . We are confident that we will benefit from both a pickup in IT spending and an economic recovery."

- Sam Palmisano, CEO

3. Microsoft: Operating the industry from the system level

Biggest announcement in 2003: Longhorn client operating system and surrounding technology. Microsoft bills Longhorn as the apparatus to foster an entirely new breed of computing, one defined by security, Web services and managed code. It also plans new Office suite software for Longhorn.

Financial track record:

Q1 FY '04 net income of $2.6 billion.

Q4 FY '03 net income of $1.4 billion.

Q3 FY '03 net income of $2.1 billion.

Q2 FY '03 net income of $1.8 billion.

Power of numbers: No. 1 worldwide in operating systems (with nearly 94% of client and 55% of server operating system shipments in 2002, IDC says), No. 1 worldwide in office productivity suites, and No. 3 worldwide in databases. No. 8 on the NW200.

What's on tap for 2004? Watch for news on the first Longhorn beta, as well as shipment of SQL Server "Yukon" and Windows XP SP2, Visual Studio .Net "Whidbey."

Powerful 2003 win: North Rhine Westphalia, Germany's largest state, chose Windows over Linux despite a mandate that local governments look for computing alternatives.

Acquisitions: In February, Microsoft acquired Connectix for "Virtual PC" technology. In April, it bought Web conferencing vendor PlaceWare. Terms were not disclosed.

"[Longhorn] is the biggest release of the decade, the biggest since Windows 95."

- Bill Gates, chief software architect

4. HP: Hardware, services powerhouse

Biggest announcement in 2003: The Adaptive Enterprise. In May (on the one-year anniversary of its merger with Compaq), HP announced its version of the next-generation data center, dubbed the Adaptive Enterprise Program (AEP). Through AEP, HP aims to integrate hardware, software and services to deliver on-demand computing resources.

Financial track record:

Q4 FY '03 net earnings of $862 million.

Q3 FY '03 net earnings of $297 million.

Q2 FY '03 net earnings of $659 million.

Q1 FY '03 net earnings of $721 million.

Power of numbers: No. 1 in overall worldwide server shipments, slightly trailing Dell in the PC market; No. 1 in the worldwide external storage systems market; and No. 1 in worldwide SAN storage. Tied for No. 3 worldwide with Dell in network-attached storage (NAS), according to The Yankee Group. HP also is No. 4 worldwide in the network and systems management software market. No. 2 on the NW200.

What's on tap for 2004? Itanium. HP is re-centering itself around Intel and tackling the challenge of moving its Compaq Alpha and Tandem customers off proprietary RISC boxes and on to Itanium machines. HP recently filled out its Itanium server line, and if those products don't catch on the company could be in trouble.

Powerful 2003 win: In May, HP announced it won a $3 billion, 10-year managed services contract with Procter & Gamble, beating out rivals Electronic Data Systems and IBM.

Acquisitions: In August, HP announced plans to acquire Extreme Logic, which specializes in Microsoft .Net applications and infrastructure. In September, it finalized the acquisition of Web services firm Talking Blocks and acquired the identity management software business of Baltimore Technologies. Terms of the deals were not disclosed.

"Infrastructure has to be able to flex with the business."

- Carly Fiorina, CEO

5. Dell: Headed deeper into the enterprise

Biggest announcement in 2003: Oracle 9i RAC clusters. In April, Dell CEO Michael Dell shared a stage with Oracle CEO Larry Ellison to announce these preconfigured Linux-based clusters of Dell servers, which are optimized to run Oracle 9i RAC databases. The move attempts to push Linux deeper into the data center while giving Dell (and Oracle) another plan of attack to gain market share from high-end WinTel or Unix/RISC options.

Financial track record:

Q3 FY '04 net income of $677 million.

Q2 FY '04 net income of $621 million.

Q1 FY '04 net income of $598 million.

Q4 FY '03 net income of $603 million.

Power of numbers: No. 1 in worldwide PC sales, with a narrow lead over HP, and No. 2 worldwide in server shipments, behind HP. Tied for No. 3 worldwide with HP in NAS, according to The Yankee Group. No. 7 on the NW200.

What's on tap for 2004? Dell will continue moving deeper into the enterprise with switches, storage and services.

Powerful 2003 customer wins: Kicked off the year in January with a deal for undisclosed terms that has the supermarket company Winn-Dixie standardizing on Dell servers and storage in each of its 1,060 stores. In May, Eastman Chemical standardized on Dell desktops and notebooks in a $16 million deal. In October, Dell won a five-year managed services contract from Boeing, terms undisclosed.

Acquisitions: None.

"The push toward standards-based systems is moving higher and higher up into the enterprise. . . . Standards are the future of enterprise computing."

- Michael Dell, CEO

6. Intel: Driving the next generation of technology

Biggest announcement in 2003: 64-bit Itanium 2. In June, Intel rolled out the third generation of its Itanium 2 chip, code-named Madison. Systems vendors and analysts roundly applaud the chip, saying the third time may be the charm for Intel's 64-bit efforts.

Financial track record:

Q3 FY '03 net income of $1.7 billion.

Q2 FY '03 net income of $896 million.

Q1 FY '03 net income of $915 million.

Q4 FY '02 net income of $1 billion.

Power of numbers: No. 1 worldwide in CPUs for client and servers and a market share leader for an assortment of chipsets used in the creation of network and wireless gear. Maintains a $4 billion research budget for development of many underlying network technologies and for studying areas such as social impacts, security and adaptive computing. No. 9 on the NW200.

What's on tap for 2004? Intel will continue focusing on mobile and wireless efforts, hoping to catch up with competitors in making its Centrino-powered devices capable of connecting into wireless LANs and other enterprise wireless networks. It also will try to boost its presence in the digital cellular chip market, where its market share is small today.

Powerful 2003 win: In November, Intel announced that CompUSA had deployed HP Integrity servers powered by Intel Itanium 2 processors to provide faster data access to employees in its 227 stores. It did not release contract value.

Acquisitions: In July, Intel acquired optical networking chip maker West Bay Semiconductor in an all-cash deal. In September, it acquired the high-performance computing division of Pallas, a German software development tools and services company. In November, Intel bought Mobilian, maker of integrated 802.11b/Bluetooth chips. Terms were not disclosed for these deals.

"The only people I hear who suggest that Moore's Law doesn't matter - the people who say R&D doesn't matter - are those who don't want to keep up or can't keep up."

- Craig Barrett, CEO

7. Verizon: The nearly national RBOC

Biggest announcement in 2003: Wi-Fi for the masses.This plan, announced in May, will create 1,000 Wi-Fi hot spots in Manhattan by year-end. This has forced the hands of other RBOCs and telco operators to declare investments in Wi-Fi access in a race to control nationwide Wi-Fi availability.

Financial track record:

Q3 FY '03 "reported earnings" of $1.8 billion.

Q2 FY '03 "reported earnings" of $0.3 billion.

Q1 FY '03 "reported earnings" of $3.9 billion.

Q4 FY '02 "reported earnings" of $2.3 billion.

Power of numbers: The largest RBOC in terms of revenue - $67 billion in 2002. And, with 10 million long-distance customers in 47 states, it is on the verge of becoming the No. 3 long-distance carrier (achieved that for at least one quarter in 2003 and increased long-distance business by 27% since year-end 2002). No. 3 on the NW200.

What's on tap for 2004? Watch Verizon for its Wi-Fi rollout, Fiber-to-the-Premises trials and deployments; next-generation IP and optical buildouts, and push-to-talk service to compete with Nextel.

Powerful 2003 win: Verizon gained 800 large enterprise contracts via its Enterprise Advance initiative throughout the year.

Acquisitions: None

"UNE-P is a maddening, destructive policy... It does not create sustainable growth within the sector."unbundled network element-platform rule.

- Ivan Seidenberg, CEO, referring to the FCC's 

8. EMC: Billion-dollar deal maker

Biggest announcement in 2003: Symmetrix DMX storage arrays. EMC launched DMX (Direct Matrix Architecture) modular storage arrays in February. The high-end storage system uses a new architecture that forgoes the switch-and-bus method for point-to-point interconnections.

Financial track record:

Q3 FY '03 net income of $159 million.

Q2 FY '03 net income of $82 million.

Q1 FY '03 net income of $35 million.

Q4 FY '02 net loss of $64 million.

Power of numbers: No. 1 worldwide in storage management software and external RAID storage while No. 2 worldwide in overall external storage, NAS and storage-area networks. No.28 on the NW200.

What's on tap for 2004? Continued development of information life-cycle management (ILM) products.

Powerful 2003 win: In the second quarter, insurance giant American International Group purchased almost 300 terabytes of EMC Symmetrix DMX networked storage, EMC Professional Services and a score of other EMC products. Contract terms were not disclosed.

Acquisitions: In July, EMC acquired Legato Systems and its ILM technology, for $1.3 billion. In October, EMC acquired Documentum, maker of enterprise content management software, for $1.7 billion, and Astrum, for its storage resource management software, in a deal with undisclosed terms. This month, EMC announced plans to acquire server virtualization software maker VMware for $635 million in cash."

"We are making the strategic moves necessary to enable our customers to manage all of their information according to its value to the business at every stage of its life, at the lowest total cost."

- Joe Tucci, CEO

9. Symantec: tops on security software

Biggest announcement in 2003: Gateway Security Appliance 5400 Series. Symantec's high-speed multifunction appliance can support thousands of simultaneous user connections. This capacity gives enterprise customers a path toward new security technologies - such as intrusion detection - without having to install multiple devices (or purchase from start-ups).

Financial track record:

Q2 FY '04 net income of $83 million.

Q1 FY '04 net income of $68 million.

Q4 FY '03 net income of $68 million.

Q3 FY '03 net income of $72 million.

Power of numbers: No. 1 security software vendor by revenue worldwide, according to IDC. But it has a far smaller (2%) share in other areas such as security appliances. No. 58 on the NW200.

What's on tap for 2004? Watch for expansion beyond antivirus products into secure content management to fight spam and spyware, and support Web filtering. Symantec also will take its first steps into storage management and disaster-recovery products.

Powerful 2003 win: The U.S.Navy selected the Recourse ManHunt product for intrusion prevention on its intranet in what Symantec characterizes as the largest government deal of that nature. However, it would not disclose contract value.

Acquisitions: In September, Symantec grabbed PowerQuest, terms undisclosed, for its "active state management" technology. In October, it purchased software distribution and configuration management company On Technology for about $100 million and SSL VPN vendor SafeWeb for $26 million in cash.

"During the recent Blaster outbreak, our Web site supported 3 million hits per hour and 1.1 million update sessions per hour."

- John Thompson, CEO

10. AT&T: Size and winning services

Biggest announcement in 2003: The all-IP core. In October, AT&T mapped out plans to ditch its circuit-switched network for packet technologies such as Multi-protocol Label Switching, and the high-margin services an all-IP core will allow, such as managed voice over IP and VPNs. AT&T will spend nearly all its 2004 capital expenditure budget (about $3 billion) on the migration.

Financial track record:

Q3 FY '03 net income of $418 million.

Q2 FY '03 net income of $536 million.

Q1 FY '03 net income of $571 million (based on new reporting methods begun for Q1).

Q4 FY '02 operating loss of $280 million.

Power of numbers: No. 1 telecom carrier in the U.S. in revenue and number of customers. No. 6 on the NW200.

What's on tap for 2004? AT&T will continue emphasizing its business services group, under new leadership, and try to reverse three years of flagging revenue by bringing in lucrative services contracts. Also expect the carrier to continue expanding its local network to reduce dependency on the regional Bell operating companies - and ultimately reduce its local-access expenses.

Powerful 2003 customer wins: AT&T grabbed several multi-million-dollar federal government contracts. These include a $180 million deal, announced in March, to manage the Internal Revenue Service's toll-free services and a $76.6 million agreement, landed in May, to manage the data network for the Centers for Medicare and Medicaid Services.

Acquisitions: None.

"The next 12 to 18 months promise a further shakeout and rationalization. While there will be fewer players, AT&T will not only survive, but thrive."

- David Dorman, CEO

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