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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 78.03+0.8%Nov 14 9:30 AM EST
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To: Lerxst who wrote (13268)4/12/1998 9:00:00 PM
From: The Phoenix  Read Replies (4) of 77399
 
So, in effect you're saying that routing switches have no value-add in software and therefore Cisco will not be able to command high margins by selling this software (IOS). That is everything will be done in hardware precluding the need for software and therefore drive the total cost of the equipment down.

We would be remiss if we didn't point out that indeed much of the task a router does in software will be placed into silicon (ASIC's), but far from all of them. What with network security, directorys, QoS, etc. etc.. there is still signficant value add in Cisco's IOS.

Additionally, ASIC's are not cheap. This additional chip will reduce the complexity of software perhaps making it less valuable assuming my second paragraph is a pipe dream. But even so, the hardware pricing will fundamentally not change much. Am I smoking dope here? And if I am, you still have a lot to do to convince me we're talking an order of magnitude in price as you claim. Where are you getting your numbers? What hardware components are being removed other than perhaps some memory? Where is the manufacturing cost savings that allows corporations to build a better product for 10cents on the dollar?

Gary
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