Is Cisco worth the premium?

Nortel loves to shout from the roof tops whenever it sees arch rival Cisco falter, and this week Tony Rybczynski, director of strategic enterprise technologies at Nortel, writing in his Hyperconnected Enterprise blog is citing a recent Gartner Dataquest report that found that Cisco's share by ports of the Ethernet switching market fell to 37%. He mulls that the results mean that two-thirds of enterprises are saving money or finding better performance elsewhere, and that given Cisco's share by revenue is 73%, "customers are paying way too much to Cisco."

He adds:

Cisco is not going to lower their prices any time soon since they could lose 15% of their revenue base if their revenue share tracked their port share! In fact, as a mature technology, one would expect Ethernet prices to come down over the years …. my friends at Gartner tell me this is generally true but NOT for Cisco.

He concludes that: "If Cisco is only a 400 pound guerilla, then don’t feed him as if he were a 700 pound one!"

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