OK, so the title of this missive could have been thought out a little more, but let me get to the point: who’s going to be number two in wireless LANs?
It should come as no surprise that Cisco is number one, and has been for some time. And there’s no reason to believe that Cisco won’t be number one for the foreseeable future; they have good products, good marketing, happy customers, and a culture of technical excellence and innovation. And they have a lot of cash. But not everyone wants to buy Cisco products, even some at large enterprises, and, regardless, it would be silly to assume that we’ll simply converge to a single supplier. That never happens in high tech; even Microsoft has competition, and the continuing high level of innovation in WLANs itself continues to create new opportunities for meaningful product differentiation. The fat-vs.-thin architecture wars are hardly at an end, and the debate of a long list of similar technical fine points is seemingly never-ending. Opportunity abounds.
I’ve been playing with two scenarios here. One is that WLANs remain a distinct class of product and that essentially all suppliers of enterprise-class systems find niches that enable them to survive. In this case, there will still be a number two, but with fairly small market share. The second scenario is that the increasing product and service scope of key IT suppliers enables one of them to reach number two with fairly large market share. I’m referring here to HP and IBM, noting, of course, that IBM at present has no real position in WLANs (or, really, networking), although they are, I hear, buying Sun Microsystems, and could easily do other acquisitions – after all, HP rounded out its WLAN line with the relatively inexpensive purchase of Colubris Networks. I think both of these firms will have a good complement of computing and related products and services, although HP is the clear leader here today since they’ve got an excellent networking offering via their ProCurve unit. But it’s also clear that Cisco is moving in the direction of broadening and building bulk via its new Unified Computing System, and that a roll-up of some of the key players in various distinct elements of IT (say, Dell plus Accenture plus Enterasys or 3Com or Extreme or Brocade) could yield yet another competitor, perhaps with one of the networking leftovers going to IBM. The core idea here, BTW, is to build a firm that can literally do it all – sell you gear, help with strategy, manage your facilities, handle outsourcing, and even virtualize most of your operation if you so desire. There’s real financial appeal to customers here, and I expect the two current megafirms (HP and IBM) to do quite well even before the recession ends and even before either can in fact literally do it all.
Thinking about number two is reminiscent of the legendary advertising campaign from back in the 1960s produced by car-rental firm Avis, in which the company declared we’re number two – we try harder. This was sheer genius and worked quite well, promoting Avis’ CEO at the time, Robert Townsend (he later wrote the classic business book, Up the Organization), to management guru. Well, everybody’s trying hard today, but hard work alone won’t do it. And given fact the WLANs are still benefitting from a high rate of technological evolution, bulk alone also won’t grab the prize – that’s not possible until WLANs commoditize, and that’s still some years off. So, for now, the coveted number two slot remains up for grabs.
