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By Peggy Watt
Power is relative. It is multifaceted and volatile. Power can be measured in many ways: by technological leadership, customer loyalty and financial stability, to name but a few. Admittedly, the measurements can be somewhat subjective; little other than financial figures can be assigned absolute values - and even then, in this industry of mergers, acquisitions and one-time write-offs in multiple quarters, numbers aren't often as they might seem. All of this makes choosing the most powerful companies rather challenging, with the difficulty factor increasing as you move down the list. To help us in our task, we've tapped the opinions of Network World staffers, analysts and other experts who diligently follow networking. So take a look at how the powerhouses stack up. Then, for more fun, compare our rankings to reader ratings. 1 Cisco
Founded: 1986 Cisco is a cinch to lord over this list. It wins the top spot because of its ubiquitous embedded base in enterprise and carrier networks.
Cisco's other priorities include developing the Internet and attacking the shortage of industry IT skills with special certification programs. For example, Cisco has taken a leadership role in the Internet2 project, a joint effort combining industry, academia and government to solve the capacity and service-quality problems of today's Internet. And the company has instituted the Cisco Networking Academies program, through which it contributes equipment, curriculum guidance and certification programs to schools and colleges in 14 countries. Cisco has made more than three dozen acquisitions in the past five years. And why not? In November, the company posted its 35th consecutive profitable quarter. Among Cisco's most notable recent moves are the acquisitions of voice-over-IP PBX maker Selsius Systems; American Internet Corp., which makes network registration software for set-top boxes and cable modems; and network security company WheelGroup. Cisco has also made some smart partnerships, including development and marketing efforts with Microsoft, Hitachi and, most recently, Hewlett-Packard. Cisco has many rivals, but its breadth of expertise is growing. Now that's power. 2 Microsoft
Founded: 1975 Microsoft is on this list because, well, how could it not be? The desktop software powerhouse snares the second spot because, in making the headway into the enterprise that it has sought for so long, it's become an enormous force in many network markets.
Which brings us to the company's challenges. If recent delays are any indication, its premiere operating system, renamed from Windows NT 5.0 to Windows 2000, may not actually see the light of day until its namesake year. While corporate customers in particular would rather the software be late than unfinished, the delay gives competitors more development time, too. Microsoft also continues to suffer from a bad reputation. People tend to think of it not as a technological innovator as much as a marketing machine, although the choices Microsoft developers make often become standards. And let us only briefly mention the Department of Justice lawsuit, at best a time-consuming annoyance, but at worst the precursor to a messy divestiture. Like others on this list, Microsoft relies on co-development projects and alliances, although more than a few of its partners have likened the experience to dancing with an elephant. Some of them - certainly Cisco - can hold their own, but others risk being squashed almost inadvertently despite financial rewards for the experience. While Microsoft sometimes suffers from not-invented-here syndrome, the company doesn't hesitate to buy technology it wants - usually not by licensing it, but by swallowing small but smart firms. 3 MCI WorldCom
Founded: 1998, by the merger of MCI (1963) and WorldCom, which was founded in 1984 as IDB MCI and WorldCom were potent companies separately, so there's no arguing that the $37 billion merged firm is a formidable member of the Power Pack.
The company is off to a good financial start, too. Earnings for its first quarter after the merger were on target with estimates. Calculations that compared the combined performance to the sum of the companies' separate results a year earlier showed a 16% to 18% increase in quarterly revenue. The company is still handling merger-related costs, and took a $3.1 billion one-time charge related to the acquisition, but the company seems to be adjusting well for those expenses. Even with much of MCI's top management leaving in the merger's wake and announced layoffs, MCI WorldCom will probably be a keeper on this list. 4 AT&T
Founded: 1885 AT&T has changed significantly in Network World's lifetime, but the company has exuded power all the while.
AT&T continues to exert itself internationally, as well. In mid-December, it grabbed IBM Global Network for $5 billion, and last month it launched a joint venture with BT to sell a suite of international voice, data and IP services. You simply can't underestimate a company that maintains as much wire as AT&T (not to mention its growing wireless ventures). AT&T's strength is voice communications, while its competition has come up with such growth concepts as business-level dedicated ISP service, local dedicated rings and voice over data. CEO C. Michael Armstrong has declared, "We are making a multibillion- dollar bet on the future of IP technology." It's no glib comment. The challenge to AT&T's continuing power comes from data services, and the company is vigorously trying to secure its place. 5 Nortel Networks
Founded: 1895 This Northern giant got more powerful with the recent $9.1 billion purchase of Bay Networks, although it still trails rival Lucent in market and mind share.
In fact, Nortel already spreads its business across several key customer types, which makes the company more stable. Its business is roughly even among broadband carriers, enterprise users and wireless service providers. One of Nortel's important missions is voice over IP, in part via its IPConnect family of gateways and call servers for carriers and ISPs. Nortel is looking to get its money's worth out of Bay in pursuit of this initiative. Developers are trying to integrate Bay's enterprise management tools with Nortel's carrier administration technology, which could provide a smoother link between IT operations and outside services. Expect to hear more from Nortel as it flexes and tries to add muscle.
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Numbers six through 10
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Part 1
