A new group of aggressive, pesky startups has begun competing hard
for the performance lead in network equipment.
And much of the telecommunications industry -- the incumbent long-distance and regional phone companies that plan to spend tens of billions of dollars on equipment during the next several years -- doesn't buy Cisco equipment or Chambers' version of the future.
The new challengers include young companies such as Juniper Networks Inc. and Foundry Networks Inc. that have jumped up to deliver high-performance networking gear that, in some eyes, beats Cisco's high-end gear in performance and reliability.
When Exodus Communications Inc., the world's largest Internet data center company, wanted new equipment to run its highest-speed networks, it looked to Foundry Networks.
The reason, said Exodus chief executive Ellen Hancock, is that her data centers' extremely high Internet traffic volumes were "stressing" the high-end Cisco gear it had installed.
Analysts say Cisco's much smaller challengers are making similar inroads among other performance-hungry customers such as Denver's Qwest Communications.
And the big players in the telecom industry are placing multibillion-dollar orders for new equipment to upgrade their networks, and many of them aren't turning to Cisco, either. They are turning to established telecom equipment suppliers such as Lucent and Nortel.
Telecommunications industry analyst Tom Nolle of CIMI Corp. in Voorhees, N.J., notes that the regional Bell operating system companies such as Southwestern Bell Telephone Co. represent more than half of the communications revenue in the United States. All have announced major network upgrade programs, and Cisco, Nolle said, hasn't won any of those major contracts. That's partly because most of them are not yet ready to put their faith in Internet communications technology as the center of their business. They don't believe, as Chambers does, that it's an IP world.
"Everyone acknowledges that Cisco is dominant in the Internet," Nolle said. "But most people don't realize that the Internet represents less than 1 percent of worldwide communications service provider revenue. The Internet rides on the backbone of the public switched telephone network."
Nolle's conclusion? "Convergence is nonsense."
Industry analyst Beth Gage with Telechoice in Denver says the communications convergence that Chambers talks about will happen -- only at a far slower pace than Cisco is counting on.
"Convergence is an evolutionary process, not an overnight occurrence," Gage said. "Cisco has what it takes to be a player in (the telecommunications equipment) market. It's a little bit early to call who is going to be the kingpin. It's easier to call who is going to be the top three: Cisco, Nortel and Lucent Technologies in the U.S." |
