Parting from its recent pattern of buying, merging or allying with other companies to bring products to market, Cisco Systems Inc. has walked away from partnerships with the two biggest voice technology vendors in the U.S.
After being spurned by voice switch giants Nortel and Lucent Technologies Inc., Cisco decided it could do just fine going it alone, Cisco CEO John Chambers said this week in a published interview.
Cisco said that it wanted to share either Nortel's or Lucent's clout with carriers, but Cisco also demanded that Nortel and Lucent refrain from developing high-speed gear similar to Cisco's Catalyst 8500 switch-router.
Both companies said no, and everybody walked away from the bargaining table.
Chambers said he has ruled out merging with a major voice vendor as a way to shore up Cisco's perceived weak voice expertise. That leaves Cisco on its own to develop voice capabilities for its gear so corporations and carriers can migrate from separate voice and data networks toward single networks that carry both.
Developing that gear on its own could be a severe challenge. "While Cisco is starting to dabble in voice-over-packet networks, [it has] absolutely no credibility in enterprise voice like Nortel and Lucent do with their PBXs," said John Coons, an analyst with Dataquest here. "Would Cisco have an enterprise transition path from a Nortel PBX to a Cisco-based environment? No."
Similarly, Cisco lacks the trust of established network service providers. "I don't think Cisco is taken seriously by the traditional carriers as knowing how to build and support carrier-hardened equipment. Just having Lucent or Nortel behind you when you go in to one of these [carriers] goes a long way. Those carriers are leery of most of the data networking companies," Coons said.
That caution has not hampered Cisco from forging a strategic alliance with U.S. West Inc., or from being named as a key provider for Sprint Corp.'s voice/data network of the future, the Integrated On-Demand Network. Nortel, whose switches anchor Sprint's voice network, was not mentioned.
Since partnership talks between Cisco and Nortel broke down, Nortel has announced plans to buy Cisco's arch rival Bay Networks Inc.
Relations with Lucent have not gone any better. Lucent is suing Cisco over alleged patent infringements. Chambers described that suit as evidence that Lucent is at a loss for how to compete against Cisco in the voice/data market. "Lucent is trying to compete in a New World environment when they're an Old World company," Chambers said.
Despite Chambers' bluster, other Cisco officials last week said the breaks between Cisco and Lucent and Nortel are not necessarily permanent. They may wind up in alliances later, said Larry Lang, Cisco's vice president of service provider marketing.
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