8 thoughts on “Is Competition Starting to Eat Into Cisco's Core Markets?”

  1. This is my own opinion, and not that of my employer (see HP)

    I reckon this year, and next you will see more consolidation of the IT market with those vendors who don’t currently have there own Networking Equipment buying someone else. Both Dell and IBM have strong relationships with Juniper. Brocade is a company that does very well at Storage, and itself bought the LAN vendor Foundry just 18 months ago. They also have everything that IBM or Dell need.

    With Cisco entering the server market, its obvious it wants to have a full end to end piece for Enterprise Infrastructure, so I wouldn’t be surprised to see a stronger relationship between EMC and themselves… perhaps a merger?

    Its going to be an interesting year..

  2. Good article Om. Cisco is also hedging their switch/router bets with video (telepresence), datacenter (UCS), and collaboration (webex) plays. All of those are relatively small compared to their switch/route revenue, but I think they are three trends that are worth betting on. They’ll have to execute over the next 2 to 3 yrs on those trends, otherwise, I agree with the risks you mention in your article.

  3. Talk about overdue! How long can Cisco expect to maintain dominance in this market with its premium pricing & 65%+ gross margins?

    The big-box guys are just attacking Cisco by offering stripped-down, purpose-built products & accepting lower margins. It’s that pressure which is showing-up in this report.

    What’s really overdue is some actual innovation & disruption. Entrepreneurs & VC’s need to look past the last round of failures & 1997 business models and fund a next generation of networking. Vyatta is about the only serious attempt trying to change the game with its Networking version of Red Hat on Intel x86.

    This is a HUGE market & there is no good reason to cede to Cisco for the next 10 years like, as it has the past 10.

  4. Disclaimer: I am an SE that works for a Juniper reseller.

    I take issue with the terms “low-cost manufacturers and increasingly desperate competitors”. This really puts a negative light on some very good manufacturers of switching and routing. In my experience, Juniper is doing an awesome job in the routing and switch market. They some from the carrier space and know a lot about high reliability, and Cisco is just recently starting to adopt some of Juniper’s practices in that area (been forced to by the competition).

  5. Let’s also not forget cisco’s last stranglehold – services, where innovative disruption from competitors like Multiven will ultimately eat into smartnet margins. Bottomline, monopolies are not permanently sustainable and competition is always a good thing for us all.

  6. After reading the articles and the 6 comments posted, hence my comments:

    Cisco is not the highest priced solution for routing and switching, off the top of my head I can say that Juniper ranks much higher prices on there solutions (without no offense to Juniper), being well justified.

    Cisco may triumph and be well known for routing and switching, but if you take a deep look into their activities in the past years, they are widely diversifying their solutions. Just know with the acquisition of Starent Networks we will be seeing more of Cisco in the ISP industry beyond the realms of router or switches. Forget L2 and L3, Cisco is going to have a presence in every inch of the telecom world maybe not in first place or second place but for sure there will be a presence; just take a good look at the VoIP, Cisco was not the first but you do think of them when you consider VoIP for your business.

    At the end of day, the business owner, the consumer and the market in itself benefits from the competition among these companies.

  7. Om
    Good Article. Regarding enemies, not only has Cisco made enemies of their competitors, they are also doing everything in their power to dismantle the used Cisco market. My company has sold used networking equipment for more than a decade, and over the past 5 years Cisco has becoming increasingly nasty to resellers in this market. We have offered to work with them to identify counterfeit equipment (which is rampant), but they refuse to engage in any type of dialogue. Furthermore, they strong-arm customers into buying new gear with fear tactics from their sales reps like “Your warranty will be void” or “You won’t be eligible for Smartnet”. I like their products, I just wish they would re-evaluate their overall strategy.

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