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In FY 2010, Cisco's fourth quarter results were disappointing, as was the company's outlook for its current fiscal 2011 first quarter. At the same time, competition with major players in its core and adjacent markets is heating up.
Which players? Below is our list of Cisco's 10 toughest rivals in a handful of its key markets, such as video, data center and collaboration.
Cisco vs. Juniper
Juniper took one-third of Cisco's share in core routing shortly after coming onto the scene in 1997. The company remains Cisco's one and only rival in core Internet routing with a 30% share of the $643 million market in the second quarter, according to Dell'Oro Group. And the two companies seek to one up each other with every announcement of a higher speed, higher density system. Current entries in this race are Cisco's recently-announced CRS-3 and Juniper's 250Gbps per slot ASICs for its T series systems.
Juniper is also Cisco's closest competitor in a number of security markets, including the $2 billion VPN hardware and software market, and in the $7 billion overall security market, which includes firewalls, VPNs, unified threat management and intrusion detection and prevention systems, according to IDC. Juniper gained a big presence in firewall/VPN systems with its 2004 acquisition of NetScreen.
Cisco vs. Alcatel-Lucent
Juniper is also an adversary in carrier edge routing but so too is Alcatel-Lucent. Alcatel-Lucent and Juniper take turns trading the No. 2 position in edge routing, where Ethernet service delivery is a key requirement for applications such as IPTV, Ethernet VPNs and mobile backhaul. Both companies are targeting Cisco's aged 7600 series and new ASR 9000 routers as their key competitive targets. Cisco's advantage is its vast installed base – 43% of the $1.34 billion market in the second quarter, according to Dell'Oro. Alcatel-Lucent's challenging that and looking to grow beyond its 19% share with terabit ASICs for its Service Router 7750 optimized for traffic management and processing of IPTV, WebTV, mobile backhaul and business VPN traffic; and 100Gbps Ethernet interfaces for the edge router.
Earlier this month, Alcatel-Lucent even made some noise in the enterprise switching market with a 5Tbps OmniSwitch with 10/40/100G Ethernet support that takes aim at the enterprise core – and Cisco.
Cisco vs. HP
With a 72% share of the $16 billion market in 2009, Cisco is dominant in Ethernet switching. It would be hard to pinpoint a rival in a market where Cisco is essentially unrivaled. Yet HP is most active and vocal in taking on Cisco in enterprise switching. At 10% share, HP is the No. 2 vendor, thanks in large part to its $2.7 billion acquisition of 3Com earlier this year.
It verbally challenges Cisco every opportunity it gets at trade shows and conferences. Despite its dominant lead, Cisco is not standing pat. The company continues to unveil new platforms and enhance existing ones, all optimized for three key strategic markets: video, virtualization and collaboration.
Former partners HP and Cisco are also becoming bitter data center rivals. HP may have drawn first blood by pledging to revive its ProCurve networking division after Mark Hurd became CEO in 2007. Then Cisco invaded HP's, and IBM's, traditional turf by coming out with its own blade and rack mount data center servers. HP responded by acquiring 3Com to boost its switch market share and overall networking portfolio, and then bashing Cisco at every public opportunity. Finally, Cisco vanquished HP as a reseller; and HP banished Cisco from its data centers.
Cisco vs. Aruba
Similar to switching, Cisco has a close-to-dominant position in wireless LANs with a 58% share of the $1.6 billion market in 2009. Aruba's next with 9%. Though that gap is sizeable, Aruba gives Cisco all it can handle in North America sales, where it had a higher percentage penetration in the U.S. than Cisco had in the second quarter of this year. Aruba is especially strong in higher education, healthcare and other enterprise verticals, and is outpacing Cisco in 802.11n penetration, according to Dell'Oro Group. And over the last four quarters, Aruba's market share has grown from 8.7% to 11.9% while Cisco's has declined from 60.7% to 54.8%. Not that Aruba is the sole beneficiary of that decline but it undoubtedly played a leading role.
Cisco vs. Polycom
Cisco's keen on video, noting – by its own research -- that it will exceed 91% of global consumer IP traffic by 2014.This will drive sales of switches and routers on the back end of service provider networks to handle all that hefty traffic. On the front end? Cisco rolled out TelePresence virtual conferencing systems for the business and home, and acquired both Pure Digital, the maker of Flip pocket video cameras, and Polycom rival Tandberg to fill out the low-end and mid-range enterprise videoconferencing portfolio. Tandberg was the market leader on videoconeferencing, so now Cisco is with a roughly 40% share of a $2 billion market, according to Wainhouse Research.
Polycom isn't taking this lying down: it aligned itself with Cisco rivals IBM and Juniper to drive sales of its own videoconferencing systems along with IBM servers and storage systems, and Juniper routers.
Productwise, Cisco and Polycom match up fairly evenly, with conference room- and office-sized, and personal Telepresence and videoconferencing systems, and associated equipment and applications. Cisco recently debuted a home TelePresence system called Umi to work with consumer HDTVs but its price is being criticized. Can you see me now?
Cisco vs. Avaya
Unified communications and collaboration are hot target markets for Cisco, perhaps the most strategic after its core routing and switching businesses. But while Cisco plays in scores of markets with another 30 or so adjacent ones in its sights, Avaya's sole raison d’etre is UC and collaboration. Indeed, Avaya and Cisco are Nos. 1 and 2 in enterprise telephony, according to Dell'Oro Group, with 17% and 14.6% shares, respectively, of the $12 billion market in 2009. The companies were early entrants and decade-long competitors in IP PBXs and handsets.