Cisco is expected to come out swinging in the second half of 2009 after losing market share across virtually all product categories in Q1. Investment firm UBS noted that Cisco was particularly hard hit in SANs, Layer 4-7 switching and WAN optimization due to increased competition and the distraction of entering new markets.
Dell’Oro Group believes Cisco’s 45% revenue drop in SANs in Q1 is due in large part to ruffling the feathers of channel partners HP and IBM by entering the data center server market.
UBS, however, believes Cisco, for the remainder of the year, might employ the same tactics it did in apparently winning a large router contract at AT&T. The firm believes Cisco was particularly aggressive in its pricing in order to wrest the deal from Juniper and “preserve position.”
In a bulletin on Juniper’s cautious tone on sales forecasts for 2H ’09, UBS states:
Cisco is likely to be more aggressive near-term after early ‘09 share losses. We think Cisco’s maneuvering at AT&T may be an early signal.
As for Juniper, visibility remains low, according to the UBS bulletin. UBS find this “surprising” given competitors, like Cisco, struck more optimistic tones for the remainder of the year:
We view Juniper’s tone as relatively cautious. We note the company may have pulled business into 1Q from 2Q and previously wrote 2Q was not likely to be spectacular in our June 2 downgrade.
UBS also notes that Juniper’s 4G wireless strategy remains unclear. For 2G and 3G, the vendor partnered with Ericsson; but Ericsson is likely to employ its own packet core technology for 4G, presumably from its Redback acquisition.
Juniper, then, is left to acquire, partner, develop or perhaps focus on markets other than 4G, UBS surmises.
Cisco’s 4G strategy is wrapped around WiMax, with stated intentions to develop LTE gateways.
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