From the CSCO thread - IBD INTERVIEW
Cisco Counters Ascend-Cascade With Web Gear
Date: 7/22/97
Author: Michele Hostetler
Cisco Systems Inc. once made most of the acquisition noise in the computer
networking field. Lately, though, it's taken a back seat to the 3Com Corp.- U.S.
Robotics Corp. merger and the pending merger of Cascade Communications Corp.
and Ascend Communications
Inc.
The industry's transition keeps San Jose, Calif.-based Cisco, the No. 1 networking
company, looking over its shoulder.
Its most notable response of late is its aggressive marketing of a new technology.
Called Layer 3, it takes routing a step further. Routers, upon which Cisco built its
business, direct data on networks, including the Internet. Layer 3 is designed to
move data faster and ''smarter,'' so information quickly arrives at the correct
destination.
Don Listwin, who heads Cisco's service provider business, recently discussed with
IBD the challenges the company faces from new and longtime competitors.
IBD:
How has the networking market changed this year?
Listwin:
The one macro-trend is customers really want to see if they can get an end- to-end
solution. The consolidation that you have seen has been in support of the
end-to-end strategy.
IBD:
But don't most companies already have products from many vendors, not just one?
Listwin:
The reality is that a year ago maybe 10% of the people were considering solutions
(from just one vendor). Now, probably 40% to 50% of customers are actively
considering it.
IBD:
International Business Machines Corp. failed with its end-to-end model. What will
Cisco do differently?
Listwin:
IBM provided end-to-end, but lost leadership. So the challenge is . . . the genius of
the ''and.'' You have to continue to do product leadership and you have to provide
value end to end. We can't deteriorate into a me-too . . . because you get into the
IBM model. Then it's only a matter of time until you're not the end-to-end
partner.
IBD:
Telecommunications companies are pushing into networking. How is Cisco reacting
to these new competitors?
Listwin:
The next level to the enterprise is integrated systems - voice, data and video
messaging. We're developing products internally to address the market. We
obviously also will do acquisitions in this area, and we (will) do major partnering.
IBD:
Are routers dead?
Listwin:
Routers as a product are still a very important category. For instance, everyone's
talking about a Layer 3 switch. That's a router. The only distinction is now we're
moving specific functions into silicon. All this talk about routers being dead (isn't
true).
IBD:
What's the update on Cisco's newest product, the Gigabit Switch Router?
Listwin:
It's our goal to have it out for Internet testing in a month or two. We will be shipping
in volume some 90 days after that. Is it a huge revenue engine for us? No. What we
think is more important is it helps bring the Internet to the next level.
The core of the Internet has been bottle-necked as of late and this will help
unbottleneck it. It's 40 times faster than the current product. It's designed
specifically for the core of the Internet. We think it's maybe an order of magnitude
more reliable (than previous products). The other (routers used for the Net) were
initially (designed) for (corporate) customers.
IBD:
Who's your top competitor this quarter?
Listwin:
From a competitive perspective, my team views the merger of Ascend (Alameda,
Calif.) and Cascade (Westford, Mass.) as our No. 1 competitor right now. I think
Ascend-Cascade is going through an integration like Bay (Networks Inc., Santa
Clara, Calif.). I don't see it being as smooth as it could be. From our perspective, I
suppose that's good.
We're really beginning to see some momentum elling to) large service providers and
carriers, not just (corporate customers). We've been criticized, and rightly so, as the
company who really let Ascend get away on us.
IBD:
So you plan to take the market back from Ascend?
Listwin:
I don't know whether we can take it back, but it's certainly our goal to be the No. 1
player elling equipment to ISPs and carriers). There's still a lot of international
opportunity. It's hard to unseat (Ascend). (But) we will give them a much tougher
challenge.
__
Ibexx
PS: While not surprising to me, it is interesting to note that Cisco views the new
ASND/CSCC company as a more formidable competitor in some areas. |
