KEP - Cisco does compete in wireless. Or it will. Check out Flarion.
Sure, it's not direct competition.
Of course, that's 'cause it is Enterprise wireless versus Carrier wireless. Which is what you'd expect given their customer channels. As with the massive shift to packet switching in the voice marketplace, I think it's merely a matter of time before industry undergoes mass adoption of low power wireless technology.
And yes, Cisco has a lot to learn about Home Location Registers. They can barely make 'em work when the equipment doesn't move around. Adding mobility to the IP equation is really going to blow it into a new paradigm.
However, that's just a difficult technical problem, to which I happen to know there are proven solutions. We can trust a company like Cisco to come up with (or purchase) at least one solution, however inelegant it might be. I smell job security for hordes of smart engineers.
No mistake about it, they do (will) "compete" in the Wireless arena. For sure. It's just that the walls and sawdust of the arena aren't where you'd normally think of looking.
And their position is far more threatening to NT and LU than meets the eye.
From where I sit, the legitimate consumer demand for mobile bandwidth is small compared to the legitimate enterprise demand. Where I do not characterize conspicuous consumption drivers (e.g. bragging about having the latest technology) to be a source of "legitimate" demand. As legitimate as these factors are vis-a-vis resulting in sales, they are not the kind of stuff that the masses will afford to the tune of tens of billions of dollars of equipment revenue per year as a component of hundreds of billions of dollars of infrastructure financed by trillions of dollars of revenue. Using the relative orders of magnitude somewhat carelessly, merely as an approximation.
Why do I mention mobile bandwidth?
Anyone with an ear to a chorus of annoying ringing tones in previously quiet and enjoyable public places, or whose friends mostly have cellphones, or who has almost been killed on the highway by the frantic actions of someone whose attention was on two square inches that had nothing to do with the thing they were about to collide into... which sooner or later is just about everyone... should see that the whole wireless market as we know it (Consumer: mobile Phone: Carrier) is approaching a level of saturation that has reached annoying, if not dangerously life threatening. Probably because the owners find them convenient and life enhancing. Occasional irritated neighbors and sudden adrenaline rushes notwithstanding.
Unlike cars, while having one is useful, having two is not widely embraced socially, except amongst small pockets of folks to which vastly larger pockets of folks attach noncomplementary pronouns. Not surprisingly, sales growth in a saturating market is slowing.
The wireless faithful are just about to the point of wandering around between sandwich boards on which is proclaimed in bold, italic font that the expected saviour is coming. Which savior is some sort of 3G Killer App that merely hasn't yet materialized. If not sandwich boards, then certainly on bulletin boards. A kind of "we've built it, it's only a matter of time now before it comes" mantra that is now old enough to be toilet trained.
As compelling as this aging but proverbially true story is, so far most of the non-life-threatening candidate Killer Apps that have raised their hands show up to be rather lacking in the demand category. And one by one they find themselves repackaged as merely Sickening Apps, or Contagious Apps, or I Wish You Would Do That Somewhere Else Apps. Just not "Killer". Except for a few legitimate Killer Apps, that mostly have to do with moving around rapidly while using them. Which have a sort of Demand Darwinism working against adoption. Not to mention the long, menacing shadows of lingering plaintiff's lawyers scaring the product liability willies out of developers with any sense whatsoever.
Even so, perhaps the Second Coming of Wireless Demand is indeed nigh upon us.
If (ok, when) it does come, it faces yet another hurdle. The supply side seems to suffer from the real problem that these applications all have the same cost per bit-second as voice, but attract orders of magnitude less revenue per bit-second. Apparently a picture is not worth a thousand words when it comes down to paying for it.
Given that the constraining piece to the operators is bit-seconds (spectrum), the economics of substitution are less than compelling. So while we wait for demand, there's also the whole supply side breathing a sigh of relief and saying "Whew, thank goodness that spectrum gobbling 3G is delayed!" And so we wait while an industry proceeds with the pace of a glacier, drawn forth merely by the pressures of gotta-have-it-to-keep-up-with-the-Joneses commodity economics, infrequently accelerated at the pace that folks need to send around pictures of Aunt Jane Holding The New Baby for twice the price of postage. Now! This Instant, Without Waiting to get home! Some people are like that, apparently.
Unless it comes to deploying a less profitable service than the one they are operating. In which case it is amazing how slowly they can drag their feet.
However, alternative "inferior" technologies (as measured on the current scale of ubiquity of coverage - e.g. base-stations per acre irradiated) have orders of magnitude less cost per bit-second (approaching "free") within less-but-not-as-many-orders-of-magnitude-less coverage area. Such as the much maligned WiFi.
And these are being deployed as quickly as students can hang them out their window, and almost as fast as IT departments can fire the guys who come in to move your PC two cubicles to the right, back to where you were a couple of months and three managers ago.
Those who aren't rabidly fanatical devotees to alternative bit-transport-technologies might recognize a very Christiansenesque "Disruptive" kind of thing going on here. Or one might think that those who bring this up are being disruptive <ggg>. It doesn't matter. We're entitled to opinions, just not to their ultimate correctness.
Where the heck is this meandering rant going?
Personaly I think these "4G" (or maybe it's 3.5G, or even 1F) technologies are going to become quite meaningful. More meaningful than 3G, which looks like it could very well end up as an expensive footnote (transmitted by 2.5G SMS?) eclipsed in the mass-market-adoption end game by "inferior" technology currently being built out in parallel on the campus and in the enterprise. Much like the railways ended up as a footnote in the overall transportation scheme of things, eclipsed by the relentless advance of horseless carriage technology.
Qualcomm barons, beware.
Seems to me that the normal progression of "high tech" is from the enterprise into the consumer, with the occasional deviation via impoverished students through academia. In the past, Carriers monopolized a channel with the meter running 'cause enterprises weren't in the business of chopping stuff into bits and slinging it around over fiber and re-assembling it on the other side. But enter the corporate IT department as a kind of everyday kitchen fixture of the Information Age. Stir in more fiber linking a multitude of Point A's to other Point B's than we know how to light up. Beat until creamy a convergence between voice and data as "multimedia" that starts up all nicely diced into bits in the first place... well, it's not clear in this recipe where the Carriers fit at all!!! Hence their rather dramatic scurrying about behind the scenes at the moment. As much as a Glacier can be said to scurry.
It appears to me that the suppliers to the Enterprise segment have a leg up on all the folks who intend to supply mass-market rollout of consumer IT. Nortel and Lucent and so on used to sell PBXes into enterprise, in which they perfected such nifty productivity enhancing features as "Divert Frank From Accounting to Voice Mail", and then rolled them out into the Class 5 switches as a software upgrade called "Call Management Services" for $2.99 per month pure margin flip-of-a-bit in a table, at ten million consumers a pop. No wonder these guys own the Carrier market.
But without a toe-hold in the wiring closet of tomorrow's IT department, they are losing their insight to the next wave of technology that Carriers will want to deploy. Even assuming that "Carriers" will be deploying much of the same kind of technology. A new generation of technology is yet to emerge. Those with the expertise to roll it out don't appear to have the insight as to what it is. Those with the insight don't have the expertise to roll it out. Whichever can be learned most readily defines the winner in this case. And expertise can be had for hire.
The landscape has fundamentally changed. Roth recognized this and failed to move his organization. McGinn didn't see it coming and didn't bother trying. Both Lucent and NT have ended up in the same place from the same direction over different trajectories. Alcatel, Siemens, Ericsson... same story but each slightly different. Cisco is on course and claims a winning lead. Not unusual for the space.
'Cause Cisco pretends it isn't interested in a space unless it's #1. Nortel is unmatched at being #2. Lucent sports a #1 self-image with actual execution that spans places #1 through #1,357 somewhat randomly and sometimes all at once. Ericsson is #1 at one thing. Acatel is all over the map in an infinite number of things and therefore average by definition. Siemens is everywhere else doing all the other things, also average. And Nokia was once in the shoe business, which probably means something.
And then there are the much smaller JNPRs and so ons nibbling at the edges and the much larger IBMs and GEs lurking in the background. Plus a host of others of all shapes and sizes sniffing around the perimeter.
Anyone with a grade-school kid can see that stock price is not the only similarity between this space and Pokemon. The game is hard to call. Except possibly for the lead. Which is where I place Cisco and why I think Cisco (the company) is going to be the gear-slinging company to beat in years ahead. Wireless included. Which makes CSCO (the stock) a strong and compelling candidate for investment.
Which wouldn't be completely Shannon if I didn't mention the words "at the right price". Which (still being me) I suspect is in the single digits. Merely by comparing the number of dollars that dance in my head (a stunningly large number) and the number of shares (also a stunningly large number) and getting quite close to merely an order of magnitude difference. At least in the right direction.
But to your point about Cisco not competing with Nortel in wireless? Oh yes. Cisco is there.
John. |
