The Power 15

In this annual look at power among network vendors, we've divided 15 powerbrokers into three categories: those with mega power, those with something to prove and those who are quickly climbing toward the highest power tier.

The Power 15, an annual look at network vendors, we've divided 15 powerbrokers into three categories.

Eight with mega power

These network vendors have built up their influence during years of market dominance, technology prowess and leadership savvy.They set the standard for their respective markets.

CISCO

When looking over Cisco's moves in 2005, industry watchers no doubt see a long list of muscle-flexing maneuvers.

The router giant completed 11 acquisitions in 2005, including its much-heralded $6.9 billion purchase of video-system maker Scientific-Atlanta. The move puts Cisco in pursuit of the next big thing - an IP television-equipment market for consumers - with enterprise implications. As video creeps onto enterprise networks, Cisco will have Scientific-Atlanta's expertise to help develop infrastructure products.

The company also made news with its purchase of wireless LAN (WLAN) switch start-up Airespace, a $450 million deal announced in January and completed in April. This was an interesting "if you can't beat 'em, buy 'em" strategy, because Cisco previously dissed the idea of WLAN switches and thin access points. Industry watchers widely lauded the about-face as good news for the evolving WLAN market: Cisco gains a low-cost WLAN product line for midsize companies and wireless management technology to boost the functionality of its mainstay Aironet fat access points, and enterprise users get more options from their network vendor of choice.

Also of note are Cisco's April acquisition of InfiniBand switch maker Topspin Communications, through which it gains a toehold in enterprise data centers, and the Application-Oriented Networking (AON) strategy announced in June. AON will give application-processing powers to network gear. Likewise, Cisco's IP Interoperability and Collaboration System allows IP devices to be built with push-to-talk capabilities.

Clearly, Cisco is looking eagerly for new markets to conquer.

Eight with mega power

EMC

Understanding some of the reasons EMC is one of the top power players in the network industry today means looking over its VMware strategy. To expand its line of business, EMC bought an interesting little company that in 2005 became the de facto means of implementing server virtualization and made its way to mass corporate acceptance. In the process, EMC itself extended its power presence with hands that now stretch beyond enterprise storage and into systems management. In 2005 VMware exceeded the $100 million revenue mark in the third quarter and now boasts an installed base of more than 10,000 customers, with 90% reporting the virtualization product deployed in production environments, according to VMware.

Beyond VMware, EMC increased its power position with the February Smarts acquisition. With Smarts, EMC cements its entry into next-generation, business-focused systems management. Mix in an extensive array of document management wares - documents, Web content, imaging and workflow - and it all adds up to a powerfully clear message that EMC regards itself as an information life-cycle management company.

To be fair, EMC didn't neglect its storage mainstay in 2005. It spent the year increasing its Clariion and Symmetrix lines, expanding into iSCSI and launching the Celerra NSX network-attached storage system.

In 2005 EMC also appears to have learned how to partner better, announcing a deal in June to support Sun Solaris. However, it has yet to join wholeheartedly in the era of open source. This was made plain when arch-rival IBM in October created an open source group - with the much-publicized absence of EMC and HP. EMC still has work to do on becoming a team player, increasingly a demand that network executives make of key vendors.

Eight with mega power

IBM

If IBM had a theme in 2005, it was open source. In January, Big Blue opened 500 of its software patents to open source developers. Later it orchestrated the Open Invention Network, a multivendor group that will buy patented technology and make it available to open source developers, and cosponsored Aperi, an open source organization that will develop storage-management software.

IBM does have a profitable method to its madness, as is demonstrated by its Gluecode acquisition in May. Gluecode offers support and services around a stack of open source middleware, including an application server, portal database and business-process management engine.

With Gluecode, IBM can compete with JBoss, another open source app server. Since the acquisition, IBM has announced plans to release a community version of its WebSphere Application Server based on the application server in the Gluecode stack, Apache Geronimo.

This version will become the low end of the WebSphere application-server lineup. The plan is that once users do their initial development work using the open source stuff, they will want to port to a network-ready, commercial version of WebSphere for their production environment, and upgrade from there as their requirements grow.

But IBM certainly isn't giving all of its wares away. It was 2005's top vendor in worldwide server revenue, according to IDC and Gartner. It also led in blade-server revenue, outsourcing deals and selected tape-storage products, according to various analyst reports. It used its financial might for a shopping spree, announcing 15 acquisitions over the last 12 months. Among the most significant are the March acquisition of application service provider Corio and the October buyout of XML-acceleration vendor DataPower.  It ended the year by buying both portal software maker Bowstreet and network management software maker Micromuse in late December.

As for technology innovation, in mid-year IBM announced plans to create middleware for RFID systems, pushed its way into the blade PC market (a form of next-generation thin clients) via an agreement with EMC's VMware and Citrix Systems, and created a new business unit focused on information-management wares.

Eight with mega power

INTEL

Intel may consider Advanced Micro Devices and its dual-core Opteron processor a thorn in its side, but the chip giant won't be losing control of the x86 market anytime soon. Consider Apple's June defection from IBM PowerPC chips to Intel processors, for example.

Still, Intel spent considerable time this year strategizing how to reduce the sting from AMD's advances. For example, it committed to create a next-generation architecture with ultralow-power consumption and to bring virtualization technology to its Itanium and Xeon processors, as well as to its Centrino mobile technology. Intel also entered the dual-core age, albeit late. In November it brought the technology to all its Xeon processors for low-end servers. Dual-core Itanium 2 processors are still in the works, as are multicore processors.

Intel also continued exploring technology options beyond the basic chip. In August, for example, it acquired XML acceleration and security start-up Sarvega. Although the short-term plan has Intel selling and supporting Sarvega's XML appliances, the real prize for Intel is Sarvega's hardware-independent XML operating system for optimized XML processing and security. Acquiring that dovetails with Intel's strategy of using software to enhance its chipset and other products such as network adapters.

Elsewhere, Intel continued its push on WiMAX, the wireless broadband access technology for business customers.

Eight with mega power

MICROSOFT

For Microsoft, 2005 may well be remembered as the year CEO Steve Ballmer hurled a chair while cursing Google CEO Eric Schmidt. True or not, the much-repeated story leaves the lasting impression of a shaken giant. Certainly, Microsoft has felt the heat from companies such as Google, Salesforce.com and Red Hat , which are promoting the idea that Microsoft is no longer innovative enough to deliver the next generation of enterprise software. Microsoft honchos know the company needs to change and they no doubt would prefer 2005 being remembered as the year they began reshaping Microsoft as a software-as-a-service provider.

In other power-enhancing strokes, Microsoft teamed with Cisco to support and implement a proposed IETF standard for allowing VoIP calls to traverse firewalls without compromising security, said it would seek standardization of the XML formats it is developing for the forthcoming Office 12 and committed to producing 64-bit versions of upcoming server operating systems. Microsoft also used product introductions to gun for presence in the new data center. For example, it began shipping Visual Studio 2005 and SQL Server 2005, released a preview of BizTalk Server 2006 and announced the Beta 2 release of the high-performance Windows Compute Cluster Server 2003. In August, the company reaffirmed its road map for Virtual Server 2005, which will continue as a separate product after Microsoft releases its next server operating system in 2007. In October it released a virtualization licensing model for Windows Server System that could lower costs for server users and help advance industry efforts to define software licensing for virtualization.

Microsoft faced its share of fires in '05, including the employee defections that reportedly put Ballmer into a snit, the continued attack on Windows by virus writers and hackers, and open source encroachment. Power does have its downsides.

Eight with mega power

ORACLE

Oracle's thirst for acquiring enterprise applications via acquisitions showed no signs of slowing in 2005. Oracle acquired 13 companies, including CRM vendor Siebel Systems in a $5.9 billion buyout announced in September. That puts Oracle on track to do serious battle with SAP. The bidding war it successfully waged in the spring against SAP for retail-management software vendor Retek provides an interesting clue to where Oracle is heading. In winning Retek's customer base, a gold list of top retailers, Oracle sets itself up for a host of database, integration and CRM opportunities. Retailers have done a relatively poor job of capitalizing on their enormous customer-data stores. An enterprise software company that can help retailers, which operate on tiny margins, grab more money from their customers will surely reap profits for itself.

Oracle also pushed further into identity management through the acquisitions of Oblix in March, and OctetString and Thor Technologies in November. Not content to own the high-end database world while taking over enterprise software applications and identity management, Oracle gunned after the low end, too. It intends to offer a free version of its 10g database and released a beta version in November. Although 10g is not an open source product, the move is clearly aimed at MySQL, a popular open source database.

With its growing influence within the application sector and the bulldog fierceness of flamboyant CEO Larry Ellison, Oracle's power remained steady in 2005.

Eight with mega power

SYMANTEC

Chowing down on Veritas in a $13.5 billion acquisition wasn't enough to stave off Symantec's hunger for new and different technology. Three months after that deal closed in July, Symantec was off to the smorgasbord again, this time picking out BindView Development, Sygate Technologies and WholeSecurity - all for policy-enforcement purposes.

But technology via acquisition is not Symantec's only strategy. In 2005, the company introduced several all-in-one gateways for enterprise users. These combine VPN and firewall, anti-spam and anti-virus software, Web filtering and other security functions in a single appliance. It began offering a hosted e-mail service for filtering spam and viruses, and controlling compliance. Joining the trendsetters merging systems- and security-management tools, Symantec also unveiled a slew of client-management applications.

If Symantec gets its way, it will soon be known as a trendsetter in storage management too. Witness its Veritas acquisition and efforts to align data-storage management and security into a utility computing story. The company also has jumped into the fray with continuous data-protection software, a new type of storage technology that backs up data instantly for recovery at any point in time.

On the downside, Symantec's sterling reputation with Wall Street has slipped a bit in recent months, where questions about the Veritas strategy still loom large.

Eight with mega power

VERIZON

Plotting the $8.4 billion MCI acquisition (still awaiting some state approvals at press time) may have occupied much of Verizon's energies in 2005, but it hasn't been all-consuming. Throughout the year, the carrier sweet-talked enterprise network executives with promises of next-generation services such as optical VPNs, IP voice and EV-DO -based cellular data services. Verizon even entered the managed services business, with outsourced security and storage offerings, and now offers a text-based enterprise messaging service for wireless business customers.

Verizon hasn't overlooked the need for sheer speed, either. By May, the carrier had wrapped up the first phase of Enterprise Advance, a program for wiring major cities, starting in the Northeast, with high-speed links. Users along the Route 95 corridor apparently like the bandwidth boost - Verizon says it had signed up 150 large customers by the completion of Phase 1.

Verizon also reports big customer gains for its wireless and broadband lines. Verizon Wireless added 1.9 million users during the third quarter, for example, bringing its customer base to 49.3 million, the company says. It also added 389,000 new broadband (DSL and fiber-to-the-home) connections, a quarterly record.

Four with something to prove

These companies offer great technology, tell a good strategic story and have won over many enterprise customers. However, they've slipped up over the course of the last year or longer. Now they're on the proving ground.

CA

The thing about CA (now officially renamed from Computer Associates) is that you can never count it out. In 2005, CA moved into recovery after years of a legal and political maelstrom. Righting the company has been John Swainson, who officially became CEO in February after holding the president and CEO-elect positions since November 2004. Swainson spent his first year cleaning house, replacing executives, revising salesforce compensation, reorganizing management structures and making product enhancement a top priority.

In November, CA launched three new products and updated 26 existing ones, including three key enterprise products, Unicenter, eTrust and BrightStor. For instance, Unicenter 11 has new agent technology and is based on a new database, and the company finally integrated its management platform onto a single, underlying technology." This keeps it in line with the general network-platform integration trend.

CA also promoted its next-generation, business-oriented management strategy.

ETrust is No. 2 in security management, and CA hopes to further its name there by beefing up its offerings. It launched a new identity-management entry, CA Identity, based on technology acquired in 2004 from the purchase of identity management vendor Netegrity.

Given how dependent an enterprise grows on its network and security management platforms, CA could well work itself back among the industry's mega powerful companies.

Four with something to prove

HP

At HP , 2005 saw a whirlwind of corporate activity to improve operations and boost revenue. In February the board ousted Carly Fiorina as CEO, bringing her six-year reign to a close and signaling its disappointment with the company's performance since the Compaq merger she orchestrated. In March the board appointed Mark Hurd, a former NCR executive, as the new CEO. In July Hurd unveiled a restructuring plan that included some 14,500 layoffs.

At the same time, HP aggressively expanded its technology portfolio through acquisition. It bought Trustgenix, for its federated identity server; RLX Technologies, for Linux -based server-management software; Peregrine Systems, for asset-management software; and AppIQ, for storage-resource management software.

Likewise, HP built its server, systems and storage lines to woo enterprise IT executives architecting next-generation infrastructures. In May, for example, it released a slew of storage products, including appliances for speeding data access and file sharing between remote offices and the data center. Recently it rolled out utility computing services, which customers can pilot before committing to using them. In management, HP in June unveiled products designed to help customers better manage compliance across their network infrastructure and monitor service-oriented applications from development to deployment. Indeed, application management is its next big opportunity.

Four with something to prove

SBC

SBC closed its $16 billion acquisition of AT&T in November, at last completing its transformation from a RBOC to a global carrier - on paper, at least. The deal gives SBC, which adopted the AT&T moniker, the scale of a true giant. It is now the country's largest telecom provider, with a forecast of $85 billion in 2006 revenue. With such bulk, the new AT&T will likely find itself second only to IBM on the '06 Network World 200 list of largest North American network players. Now the real fun begins, as the new entity begins merging and purging employee bases, operational systems and network infrastructures, all while catering to the ever-more sophisticated demands of its newly expanded enterprise accounts.

As the premerger SBC sorted out its business affairs in '05, the old AT&T continued upgrading its services portfolio and making infrastructure improvements all in the name of IP. It added IP VPN capabilities, enhanced its Web hosting services, prepped new security services, unveiled a hosted IP PBX service and teamed with Microsoft to develop collaborative services.

The carrier also began planning how to move legacy services onto its global MPLS network. In wireless, it renewed its commitment to WiMAX, a fixed broadband wireless technology, for business customers.

If the old SBC is to recapture the glory of the old, old AT&T, it must quickly capitalize on this IP legwork and create an advanced enterprise services portfolio.

Four with something to prove

SUN

While Sun hasn't managed to find stable profitability, it remains a pacesetter in several areas. In September, it launched its Opteron-based server line in the hopes of snagging more of that lucrative low-end market. Sun has been sharing the third-place market-share spot with Dell for worldwide server revenue (although it slipped a notch behind Dell in the third quarter), with IBM in No. 1 and HP at No. 2, according to IDC. Sun may further its server position when its eight-core, energy friendly SPARC chips, called Niagara, begin shipping in a new Sun Fire family.

Sun also drew applause from the open source movement in June, when it made good on its promise to release an open source version of Solaris. By October, Sun reported distributing more than 3 million copies of the operating system. In November, Sun announced it would offer all of its software for free in hope of encouraging the open source developer community to build more apps for its platform. Following IBM's lead, Sun removed legal restrictions on 1,670 of its patents, many of them related to Solaris.

Sun looked toward partnerships too, to spread Solaris. In the fall, IBM announced that its BladeCenter servers would support Solaris. Egenera soon echoed that pledge for its BladeFrame x86 blade servers. Sun also made headlines for its acquisitions of enterprise application-integration software maker SeeBeyond Technology, for services-oriented architecture technology, and storage systems vendor StorageTek.

Three contenders

Many network vendors are gunning for a spot among the mega powerful, but these three have the technology, the drive and the gumption to succeed.

AVAYA

Avaya used 2005 to tear it up in the VoIP market. Analysts place Avaya neck and neck with Cisco in enterprise telephony market share, with each owning about 25% of the worldwide market. Avaya's hybrid PBX approach, joining TDM and VoIP, attracts users who aren't ready to hand over voice entirely to IP. Its emphasis on professional services and support for third-party software development also win kudos.

In June Avaya shook hands with Research In Motion to bring Wi-Fi VoIP to the loyal BlackBerry user base and expanded its relationship with Juniper Networks to include joint development of convergence products. The ongoing joint development effort between Avaya, Motorola and Proxim to create wireless voice products bore more fruit this year too, in the form of Wi-Fi and cellular roaming technology. In July it partnered with IBM to integrate VoIP into IBM's instant messaging and conferencing products. In September it announced a deal with Sprint to develop wired and wireless hosted VoIP services. It also announced a managed service for small- and midsize business (SMB) IP users, in conjunction with XO Communications. It backed up its interest in the SMB market in September when it acquired peer-to-peer VoIP product maker Nimcat. Avaya also unveiled the results of its partnership with SAP, announced last spring, in which Avaya's IP telephony technology added alerting, messaging and conferencing to mySAP applications.

The Avaya of today could be a business student's case study for the core competency business model. Its focus on convergence means that it restricts itself to three areas: IP telephony products, contact-center wares and IP-based mobility. As a $4.9 billion company (for fiscal 2005), the 5-year-old Avaya is far smaller than some of its competitors, like the $14 billion Alcatel (as of 2004). But the upside for its users is that Avaya also has only one set of customers to please - the enterprise network executive.

Three contenders

GOOGLE

There's a line in the movie "Yours, Mine & Ours" in which the love-struck character played by Dennis Quaid confides in his buddy that he was up all night "googling" a woman. Google, like FedEx before it, has become an American verb. That in itself doesn't make its power noteworthy to the enterprise network executive. But if you take Google's enormous brand-name recognition, its Wall Street love affair, its network-industry CEO and its interest in technologies such as VoIP and enterprise search, you get a company worth watching - even worth googling.

Google's power crescendoed in late December when it blocked Microsoft from becoming a search-engine partner for AOL. Microsoft had reportedly been attempting to partner with AOL, but instead Google retained its position as AOL's search engine - which generates a lot of ad revenue for Google - and agreed to pay AOL $1 billion for a 5% stake, Google said. The two also revamped how they will divvy up ad revenue stemming from the partnership.

The expectations for Google are huge. Some think it will be the one to topple Microsoft from the desktop, if it adds calendar and word processing to its e-mail and IM functions. (The possibility has been the subject of much debate, stemming in part from its vaguely worded partnership announcement in October with Sun, maker of StarOffice.)

If not Microsoft, where might Google flex its power next? Industry cocktail parties have been made by the Google-acquisition guessing game. Should Google buy TiVo? Should it buy a Linux thin-client vendor? It has begun dabbling in consumer VoIP services - will it pick up VoIP vendor Vonage? What would be the implications if it were to buy a classic enterprise vendor such as Sun or Novell? Much imagination is required to see the $3.2 billion Google (as of year-end 2004) as a powerful network player alongside IBM. Yet network executives that don't put Google on their watch list simply aren't paying attention.

Three contenders

JUNIPER

For Juniper in 2005, it was all about the enterprise. Through acquisitions and R&D, the vendor continued its enterprise venture; in so doing it has positioned itself as a go-to vendor for security and application performance improvements. Juniper might not have the volume of Ethernet router ports that Cisco has, but it is showing what it takes to get the enterprise eye - and a fair amount of nods too. According to the company's third-quarter '05 report, enterprise now accounts for one-third of Juniper's yearly revenue of more than $2 billion. Enterprise product sales were up 17% quarter over quarter, according to the company.

Juniper's '05 acquisitions include Funk Software, for network-access security; Kagoor Networks, for VoIP gear; Peribit Networks, for WAN-optimization technology; and Redline Networks, for application front-end processing. The company's security enhancements include intrusion detection, SSL VPNs and a policy management appliance. The latter reveals Juniper's determination to rival Cisco and Microsoft with its secure network-access scheme.

> Next Power story: The most powerful companies

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