Thread, here's an analogy for the networking industry as compared to the computing industry of the 70 to late 80s:
IBM was dominant, no one got fired for buying IBM, and they lived off of big fat margins on high end proprietary main frames. IBM used this to try and become all things to all people, and dominate the world.
DEC was also a big player, and tried to beat IBM at its game and developed a loyal base.
HP was a niche player in the high end sytems game for corporate accounts - they had great technology but were poor at marketing and had this weird low end line of peripherals that analysts hated becaue those printers and calculators were low margin and subject to price wars.
Now fast forward 5 - 10 years to mid to late 90's. IBM got turned upside down by the move to client server (but has finally turned it around), DEC is dying a slow death, and HP is a force based upon its dominance in the peripherals market and its continued expansion into high end UNIX and mini computing enterprise accounts.
The networkers, I believe have a close analogy to where computing was in the 80s. Cisco is IBM, Bay and Ctron are DEC, and 3Com is HP.
No guarantees on how things turn out, and Cisco has yet to fail at execution, but they face similar challenges regarding proprietary high end systems that IBM once did. Ctron and Bay will have a tough time going it alone as they do not lead any one market space and will be forced to either consolidate or try and bulk up or get acquired,or face the death spiral. 3Com has this great low end line that everyone thinks will kill them, but it could just springboard them to the top of the retail/SOHO market, and they could just continue to get better and better at the high end systems game which means fat profits and margins.
My thought is that to be successful long term in the networking industry you've got to lead in particular market spaces - CSCO and COMS are best positioned for this, as were IBM and HP. |
