Hi ardethan,
So insofar as IP telephony for enterprises is part of CSCO's natural market, extending their Gorilla power into
it shouldn't be too tough. But I'm not yet convinced that they'll have a real leg up when it comes to selling to
telecoms, which seem to be outside of CSCO's natural market.
I don't see Cisco replacing telco 5ESS or DMS100 Central Office switches any time soon, and this is not Cisco's targeted market. However, the enterprise market is big business for the telcos. Large customers routinely sign multimillion $ contracts with a telco for voice services, either on a Centrex or PBX platform.
In the last few years, the Telcos have branched from their traditional voice business into data - selling data solutions to these same enterprise (as well as government and education) customers. Thus, the telcos have expertise in voice, with business partnerships with Nortel, Lucent, or NEC. They also have expertise in data, with business partnerships with Cisco, among others.
So when I think of Cisco penetrating the telco space, I look at it from a system integration reseller perspective. Where the telco traditionally sold the customer a Centrex or PBX solution, they can now sell them an integrated IP telephony solution, most likely over the same Cisco network that they sold to them earlier. These IP telephony solutions will scale to thousands of phones. (By the way, Nortel and Lucent has VoIP solutions as well). The telco wins either way by continuing the relationship with the customer as their network provider.
I can't substantiate this, but a Cisco employee last week told me that the vast majority of their business in the U.S. is through partners. Very little of their business is direct. Telcos are big players in this space, but of course, not the only players.
Voice is becoming a cheap commodity. Companies like AT&T, who derive most of their revenue from long distance voice, are hurting. It will only get worse. The telco survivors will be the ones that are moving successfully into the data market, IMO.
Skier |
