When it comes to network providers and data equipment providers, can anyone really compete with Cisco? Perception may be no. But the reality can be very different. Or at least a little muddy.
Yes, Cisco dominates a big slice of the networking industry pie. However, HP, Nortel, Alcatel, Huwaei of late have been aggressively eyeing this space to gain more market share. But for anyone who really challenges Cisco’s dominance…they have their work cut out for them.
In my opinion, Cisco only keeps smaller players like Juniper and Foundry in the data network market to avoid monopoly situations. With the largest footprint, deep market penetration and a wide open range of high quality product portfolio, it has built a significant level of durability into its competitive business strategy.
As far as Alcatel (or Alcatel-Lucent) and Nortel are concerned, they can be classified as telecommunications players rather than datacoms players and HP is too diversified to compare with Cisco as a pure data networking player.
Cisco’s business can only be threatened by changes in consumer preferences/demand (external) or technological obsolescence of its current products (internal), both of which are hard to imagine due to the capital resources it spends on market research and niche acquisitions.
Juniper is positioning itself on many levels to compete with Cisco. With their newly launched switch platform and J-series routers and acquisition of Netscreen and Redline etc. Juniper has already competed fiercely for core network space and has done marginally well with the ISP market. However, they haven’t figured out the company very well. With their new product releases aimed squarely at removing Cisco from its prime position, we may see a change in the landscape. Large corporations like to have more than one provider to compete with each other. Healthy competition forces innovation and lowers prices.
If Juniper can ever come up with an effective marketing plan and fire the stupid cartoons trying to be funny, they may have a legitimate shot. They did something pretty brilliant a couple of years ago and offered free classes to current and potential customers to get engineers more familiar and comfortable with JunOS. Remember that OS/2 didn’t die because it lacked quality or desirable features.
Nortel has established the necessary feature, functionality and footprint within the voice industry. As the line between traditional voice and data blurs, Nortel will be an increasing threat.
However, the only component of the question that was left out was “why does Cisco have this position?” The answer to this question can be found in the answer to how many IT graduates have studied Cisco courses, are Cisco accredited, or have used Cisco equipment during their education? Interestingly, the answer is the majority. There are very few accredited Juniper graduates, and even fewer graduates from Nortel, let alone Huawei. But this does not mean that their respective products are better, worse or the same as Cisco’s. It simply means that Cisco has cleverly used the brand to differentiate itself from its competitors. People, by their nature, gravitate towards what they know or are comfortable with. This doesn’t mean it’s right or wrong, it’s a comfort thing. The same question can be asked about McDonalds, Coca-Cola, Pepsi, and Nike.
The difference is not so much the technical aspect of the equipment providers, but rather the marketing approach of the companies.
Cisco, although a manufacturer, has marketed itself as a “system vendor,” which is only achieved through joint strategies with larger system integrators. This has led the customer to believe that Cisco is bigger and more versatile than it really is, a very smart approach. Cisco has always executed a platform to allow its customers to adopt the IP strategy in the data and voice arena without a massive upfront cost. Thus crossing the limit of voice and data (a normal strict division).
Juniper markets the voice elements, that is, the old voice PABX folks, as the telecommunications market.
Procurve sells to a strict SMB market and is a cheap resale product.
The Chinese have developed a competitor to Cisco based in Basingstoke, UK. However, it lacks a solid customer marketing plan.
That is why we all talk about convergence of voice and data. It’s what most companies try to sell. However, there are still sharp divisions in end-user/customer job roles…with data rooms in one area…and voice frames in another.
The bottom line is simple… each manufacturer, each integrator from different areas with different skill sets needs to work together to solve/serve customer needs. The client requires an aspirin for hers…headache and not the ingredients to make her own. Cisco will dominate its market due to a strong strategic partnership program with direct customer relationships. If anyone wants to challenge this, they still have a lot of work to do… this isn’t really a question of technical skill.
But… Honestly, I think Cisco is about to go down, just like IBM did in the early 90’s. They have forgotten that people think of them primarily as a networking company. They are no longer the first to come up with new ideas. They seem to think that an “I stop” attitude will suffice.
For example, a friend’s company just completed an assessment between 3com, Cisco, and HP. All three companies make products that can easily provide you with a fantastic network. In the end, Cisco has offered deep discounts, which makes it competitive, but is not willing to extend the discounts for any length of time.
They’re already a Cisco shop, and really just compare them to other companies for various reasons. The most important one is this… in the last few years they have been installing HP and 3com switches to expand their network. Because, generally speaking, both products are around 1/3 of the cost. Every time they decide to buy a new switch, they do their research and just can’t justify the extra expense as the other two products will meet their requirements.
HP is a solid line of products, well thought out, and comes with a lifetime warranty. They know exactly how to position their product and where to price it. Your sales people run circles around the competition. They clearly intend to clean up the clock for Cisco in the small to mid-size market, and they have the resources to do so. HP’s solution allows you to use Chassis in wiring closets…if you choose…without paying any real premium. Your switch’s operating system appears to be very similar to Cisco’s, but there are fundamental differences that some will find refreshing and others frustrating. Cisco better watch out for these guys.
3com has an impressive product line in the 4500, 5500, 5500G and 8800 products. The performance is amazing, for over 2 years in their 5500 G product line they have been able to logically and physically stack with 192 Gbps. backplane velocity. If you want to convert a non-powered switch to a powered one… all you have to do is change the power supply. Which costs only as much as the cost differential between powered and non-powered switches. There has been a 10G slot on the back since it was designed. Now they offer an OSM module that can go in the 10G slot. The OSM module is a Linux card with backplane access.
The Switch OS is a bit IOSish… but it’s improved in the way you can query it (“show this” is awesome) and the way debugs work.
In the last 3 years, 3com has vastly improved their support staff. They actually call you on the phone (something the people at Cisco don’t seem to want to do anymore) and seem to offer a high level of expertise.
3com offers 2 IP PBX lines, the NBX and the VCX. Comparing these 2 today is similar to comparing the Mitel SX100 in the 1980s and 1990s to the ROLM. The NBX is a rock solid medium to small sized PBX that performs very well and offers many features. However, it falls short if you’re looking for an enterprise-grade solution. This is where the VCX comes into play. It can scale pretty much as big as you want, it has great features, and although they had issues with it at first, it’s now a very stable product.
This line of products is impressive, and they can beat Cisco’s price even with incredibly high Cisco discounts. If 3com is ever forgiven for leaving the Core market when they did, and if they ever learn how to market their products effectively, they could easily capture a significant chunk of market share from Cisco.
My friend hasn’t made up his mind yet, but it seems a bit unlikely that he’ll continue drinking Cisco Kool Aide any longer. Cisco is an amazing company, and he and I think they’ll figure out his vulnerabilities and react well, but not before they’re in a lot of pain. My friend has worked with his products for 18 years and is sorry to see what has happened to them due to their incredible growth in power. Hopefully Cisco can recapture his leadership aptitude and attitude.