Excellent Ravi Suria article, I've seen it posted on numerous threads, as it talks about things that are going to impact a lot of companies.
1. As information transfer increasingly takes place in digital format, it is the old telco equips (LU, NT, etc) that have the bigger problem in learning new technology, and making entirely new products. IMO, CSCO's niche (a big niche, but still much smaller than the telco equip market) in enterprise networking, gives them the better base from which to dominate the market, in the future.
2. You are right, that the telco service providers are going to consolidate into a handful of huge global companies, and they will deliberately spread orders around, to keep several viable choices among the equip companies. Sort of like the way Compaq makes repeated ineffectual efforts to keep AMD as a viable alternative to INTC, and Nokia is doing everything it can to dilute QCOM's IP in 3G (again, without much success). The thing is, telecom service, by its very nature, is a commodity. And there are still a lot of "national champions" who will be protected by their governments. So, I think CSCO is going to end up as a Gorilla, or a strong King, in an industry far bigger than enterprise networking. |
