My two cents on Cisco's vulnerability is:
Dell's attack in the PC arena has been based on producing lower priced hardware, and lower prices have wide appeal, in any market. I don't know if mechanically, there is much difference in the manufacture of routers, or if the number required by the market has reached a point where a Dell-like model can make a dent. But if the works inside can be made on a Dell-like basis, and if the numbers needed is sufficient, then Dell can puncture a soft underbelly based on price. (I am assuming performance would be comparable.)
A Dell attack would begin by targeting a particular customer group...say, Fortune 501 to 1,000, or Department of Transportation, and spread to another, and another. Cisco wouldn't know what hit them because it would be blitzsell.
Dell has mastered the notion of low-cost manufacture, Cisco has nailed scoping, pursuing, and filling, the need for networking. If Dell can be where the needs are, then Cisco's margins for the same business are at risk. If Dell wins one, Cisco's margins on the next will be at risk. So that's what I'd be watching...
To counter, Cisco would have to offer additional goods, features, or services not included in a Dell model, and would need to either give up parts of the market not needing those add-ons, or surrender margins in them. Again, this assumes the numbers of units needed either are or will become attractive to Dell. Someone else will have to fill in that part of the picture.
Only an opinion.
chaz |
