Cisco leads, the rest follow:
Whither Cisco -- What the Internet's Biggest, Baddest Company is Up to Next
Jesse Berst, Editorial Director
ZDNet AnchorDesk
In the technology space, it's not who you know. It's who you watch.
I'm here today to remind you that the company you most need to watch is Cisco Systems. Cisco unveils its plans for the wireless market today, promising alternative Internet access into hard-to-reach areas not served by high-speed cable or DSL service. This is the same networking company that just last month passed Intel to become Silicon Valley's most valuable company -- with a market capitalization approaching $300 billion.
As others have noted, this marks a changing of the guard for the tech industry. Before, we watched Microsoft and Intel. Now we'll watch America Online and Cisco.
Many won't recognize Cisco. It's not yet a household name (unless you're a tech investor, in which case it's probably your favorite name, since its stock has quadrupled in two years). But if you want to know where the industry is headed, you need to know what Cisco is up to next.
And I can sum up Cisco's direction in two words: up and down.
Before I explain, let me quickly bring you up to speed on Cisco. Founded in 1984, today it is the biggest supplier of plumbing for the Web. For instance, 80% of the Internet's routers come from Cisco. It has been the "safe" purchase. It did $12.2 billion for the fiscal year ended July 31. Business Week reports the company will grow another 37% this year, to $16.6 billion.
That growth will come from several fronts:
Cisco is heading up: It has set its sights on being a phone company supplier in competition with Nortel and Lucent. It's easy to understand why; that market is at least 10 times larger then the Internet space. In August, Cisco bought Cerent for a staggering $7 billion so it could compete in the growing market for optical networks. Click for more.
Cisco is heading down: It's making a big push right now to become a provider to small and medium businesses. Lining up distributors and adding consultants. And trying to build its brand name through advertisements.
It is also targeting the business market with its new fixed wireless service designed to connect hard-to-reach locales to the Internet via a wireless "microwave" technology. It is even giving away the core technology -- which uses reflected signals, known as multipath -- as a means of breaking into the market. Click for more.
But there's more to Cisco's master plan. It wants to go further down market, to individual consumers. It plans to sell its new fixed wireless service to consumers by year end 2000. And it hopes to dominate the market for home networking, which will be a multi-billion dollar space some day. (About two years later than most analysts predict, but that still puts it only four or five years away.) It will get there by licensing its technology to consumer electronics companies such as Sony. And by investing in home-networking startups.
Though Cisco has a history of making success look easy, it faces several threats as it pushes forward:
Tough new competitors. Cisco wants to own the telphone market. To Amazon the existing "old guard" equipment suppliers. But Nortel and Lucent have been selling to phone companies for much longer. They have more salespeople, more relationships, more reliability.
Pressure on original business. As Cisco moves into future markets, upstart companies are eating away at its original business. Juniper Networks, for instance, sells a superior router.
Lack of familiarity. Cisco has no brand name recognition and no distribution in the consumer space. Intel and 3Com want the home-networking market too, and they do have name recognition and distribution.
Don't get me wrong. I expect Cisco will find a way to remove these obstacles. And really, the only thing missing is a good catch-phrase like Wintel that will provide some household cachet. AOLco? America OnCisco? Help me out here. Use the TalkBack button to send me suggestions -- or to discuss Cisco's prospects for success in its latest initiatives. You can also jump to my Berst Alerts forum. And please take today's QuickPoll.
zdnet.com |
