Intel inside networking

With networking being built into everything from tennis shoes to pocketbooks, the real show these days is at the edge and in the appliance space. Major brands are moving to sell networking as part of their products. Sony wants to sell you VoIP. Nintendo wants you to use its Wi-Fi at McDonald's. Before long, Virgin will be selling IPTV service in the United States.

Talk to any start-up, and its technology strategy usually centers on "reducing this all to the chip level" - and that's where the big cost-savings and efficiencies come into play. The biggest player in networking today is also the largest chip vendor in the world, Intel.

Intel dabbled in DSL, looking at ways to optimize its relationship for high-bandwidth applications, but really made its mark in Wi-Fi with Centrino. Then Intel planted itself right in the middle of the VoIP market with the most popular chip set, codec and add-on boards for IP PBXs. Now Intel is pushing for WiMAX in the same fashion. It's buying up XML firms (Sarvega) and other enterprise software players. We're running into Intel in Hollywood, cutting licensing deals with the consumer electronics vendors to build software libraries. Intel realizes that it starts with the chip and then goes to the chip's software ecosystem, and is bidding to be a full-scale solutions company. Networking is core to that.

As Intel sucks more into its ecosystem, traditional network vendors have to do some reinventing to stay powerful. Key network players have used industry consolidation, corporate expansion and other lateral moves to stem major power losses lately. For example, Cisco has been increasing the size of its pie through acquisitions (Linksys and Scientific-Atlanta, for example) to keep ahead.

Alcatel likewise has made some important - nay, impressive - business and market-share wins in the edge-router market and in IPTV/passive optical networking. Its deals with Microsoft for systems integration on the RBOC IPTV rollouts and continued moves in wireless/wireline integration are making Alcatel a tough competitor.

Juniper has more of a problem as a network player and has lost some of its market sway. While there were hopes of further bold moves after the NetScreen purchase, Juniper really has not made any major market moves to gain breadth and share as you'd expect of a power player. While its market share gains have been steady, its power gains have not been there. Relative to the competition, Juniper needs to make some bolder moves to get more and deeper traction into the enterprise - the core markets are simply not going to keep growing at the pace we've seen lately. So profitable, yes; powerful, not as much as it was when the market was more narrowly defined.