Jim and Steve are old enough to remember when the Goliath that is now Cisco had several viable competitors. While it is a stretch to say that today Cisco does not have any viable competitors in most of its traditional enterprise markets, it is only a bit of a stretch. The question this newsletter addresses is what happened to those competitors of yesterday and who if anybody can compete with Cisco in the future?
What impresses us most about Cisco is not its technology. In particular, over the years many competitors have had better technology than Cisco. One of the tragic flaws of many of those competitors is that they thought they would beat Cisco in the market just because they had better technology.
In general, that didn’t happen.
What impresses us most about Cisco is its ability to re-invent themselves.
In the mid-1990s Cisco was just a routing company. Along came LAN switching and Cisco did not have a product. Cisco bought its way into the market acquiring companies such as Kalpana and Grand Junction. At the time Cisco had some strong competitors. Bay Networks (remember them?) had just acquired a company called Rapid City which had a Layer 3 switch that was tested at 7 million packets a second back when that was a large number.
The Bay Networks products also had a gigabit Ethernet interface long before Cisco did. What happened to Bay Networks? One, it was acquired by Nortel, a company that really did not get the enterprise LAN market. Two, it did not execute well and subsequent products never lived up to their expectations.
But it is not fair to focus just on Bay Networks. In the mid 1990s, Cabletron was a close partner with Cisco. Then came the fateful day when Cabletron decided to very publicly declare war on Cisco. That was not its best move. And of course there was 3Com. Long before 3Com announced that it was exiting the enterprise business, Eric Benhamou, 3Com’s CEO lost interest in enterprise equipment and became fascinated by PDAs. Extreme Networks? It rose quickly but demonstrated the law of physics that says everything that goes up must come down. Juniper Networks? It clearly gets the service provider market but to date the enterprise marketplace is just not part of its DNA.
Today’s enterprise switch and router market is dominated by Cisco. HP is in second place, but seems to work hard to keep that a secret. Many of the other players are struggling to find a niche. We think that is regrettable.
In general, customers benefit when there is healthy competition, that does not describe the enterprise switch and router marketplace.
In the next two newsletters we will look at some other areas of the market to determine if Cisco is indeed the goliath of that market and if so, is there a viable David? In the meantime, we would like to hear from you. Are you concerned about Cisco’s dominance? What markets do you see that have healthy competition?
Editor's note: Starting Nov. 19 week, you will notice a number of enhancements to Network World newsletters that will provide you with more resources and more news links relevant to the newsletter's subject. Beginning Monday, Nov. 12, the Wide Area Networking Newsletter, written by Steve Taylor and Jim Metzler, will be merged with the WAN News Alert and will be named the Wide Area Networking Alert. You'll get Steve and Jim's analysis of the convergence and WAN market, which you will be able to read in full at NetworkWorld.com, plus links to the day's WAN news and other relevant resources. This Alert will be mailed on Tuesdays and Thursdays. We hope you will enjoy the enhancements and we thank you for reading Network World newsletters.