The communications industry, as we once knew it, no longer exists. At its most recent industry-analyst meeting, Cisco stated quite emphatically that it was a "computer company," not a "communications company."

As the market leader, Cisco realized that it must change the way it does business to meet the challenges it faces in a global market with diverse growth rates, competitors and technological-demand criteria. For years Cisco been trying to evolve and transition from a classical, point-product company to a solutions company. In pursuing that path, Cisco ran into a strategic industry conundrum: partners or competitors.

For years, the concept of "coopertition" has played a significant role in the business practices of the IT and communications industries. In simplistic terms, coopertition occurs when two or more vendors can go to market in one space, then be competitive in another space -- partners and competitors.

The benefits of synergy in the past far outweighed the lost business revenue and customer dissatisfaction that can occur without coopertition. What has changed to make this business practice vulnerable? The communications industry, as well as the computer industry, are becoming software-centric rather than hardware-centric. Extracting high margins from hardware is increasingly difficult. Software and solutions are another matter.

Numerous forms of software exist -- applications, middleware, operating systems and so forth. Major IT companies, such as IBM, HP and Sun, all made the strategic decision in the late 1990s to avoid the applications space populated by their customers and partners. Revenue and profit growth for these companies became a directed business strategy of blended services, hardware and software. The same was not true for the major software companies, such as Oracle, SAP, Symantec and so forth. The limited growth potential caused by a narrow product focus forced strategic changes in direction for new growth. That growth, based on M&A investments, placed them directly into their classical partners' business spaces. This tangential growth strategy has accelerated the demise of coopertition in favor of competition.

The communications industry has taken another tack, with partnering of IT vendors being necessary to deliver a complete product solution to a customer. Network management, unified communications, security, IP Multimedia Subsystem, operations support systems, business support systems, and so forth are all examples of communications-industry applications requiring IT partnership. Be it corporate, consumer, small-to-midsize business (SMB) vendor, or service provider, no communications vendor can provide a complete solution without an IT partner. This dependency worked well until both IT and communications vendors aggressively encroached into each other’s market spaces.

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