Observations for Uncle Frank:
1. My real issue here is that Cisco's position in the carriers is isolated to very specific product categories, and that the transition to being a real solutions vendor to a real multi-service carrier will be difficult.
2. Cisco's acquisitions have begun to shore up some deficiencies, but they are a long, long way from being a player in anything other than IP routing and to a lesser extent, ATM switching, and high speed access technologies.
3. For the real problem that carriers face - managing an increasingly complicated network - Cisco is a broken record. "Fork lift out the old world equipment, buy internet based equipment" . Carriers can't and won't do that - more than 90% of worldwide industry revenues come from voice carried over a trillion dollars of installed base.
4. Cisco's inititative to address the troubled state of carrier software is to form an alliance of HP, Telcordia, KPMG, and themselves. Please check the historical record of tech industry alliances at this scale - it isn't pretty. In fact it is a much worse record of success than for big, geographically dispersed mergers.
5. Optical - Cisco has limited itself to interfaces. Eventually, optical switches will begin to crowd out traditional electronic data routers and switches. I'm sure Cisco will buy someone, but for the time being, they are missing out on a red hot market that is 3 times the size of the carrier data equipment market.
6. Wireless - this market too is poised to take off with introduction of 3G. It is already 4 times the size of Cisco's carrier addressed market
7. Cisco currently represents less than 1% of world-wide carrier spending. Sprint ION is an industry joke (BTW using Nortel in the core of the network), USWest is buying from every vendor like a drunken sailor, Telia (where Cisco bought out an existing NN network to get a shot at architecting a network soup to nuts) is profoundly unhappy.
8. Bottom line: Cisco is a Gorilla in enterprise networking. It has 50 cents on every dollar spent, with dominant positions in routing, LAN switching and access devices. They are trying to translate that into a position in the carrier market. There is a long way to go, with many stumbles, before they succeed. Even then, Cisco will be one of a few rather than the Gorilla in the carrier space.
9. If any company has a shot to be a gorilla in the carrier market it is LU. Check out the new Softswitch and PathStar products. |
