Some interesting excerpts from First Boston from the Cisco analyst meeting earlier this week. (thanks to DJO)
First Facts Presented:
1. The Internet economy is characterized by the delivery of high value applications such as e-commerce and voice over packet-based networks.
2. Current circuit switched networks were optimized for voice and lack the intelligence, flexibility and scalability required by the applications of the Internet economy.
3. Cisco believes, and we concur, that there needs to be a massive investment in data networking technology to build the networks of the Internet economy.
4. With enormous leverage to the Internet (70-80% market share of routers in the Internet and the dominant software position), Cisco is potentially the biggest beneficiary of this model....
Hmmm, Bong, maybe we're not fully valued yet...
The..."internet economy is upon based the creation of a more application aware network that can shift Internet usage from causal surfing to fully secure e-commerce. Via IP-based, packet technologies, Cisco is thus able to change the cost model of the telecomm sector by an order of magnitude, while the deployment of a broadband infrastructure provides service providers new revenue streams as a broader set of applications become available.
Hmmm, nice spot to be in. Perhaps Cisco can indeed command a price premium.
· Cisco is at the front end of a several hundred billion dollar revenue opportunity as the volume of data traffic begins to outpace voice traffic.
Ew... again.. Cisco is fully valued - NOT!
· While there are skeptics of Cisco's ability to accomplish a major
repositioning of the company towards service provider customers, we are confident management can do it because they have done it three times previously: once in routers (from high end to low end); again in mainframe market and a third time in the switching business. Each time they ended up with dominant share – over 50% low end routers, over 80% SNA and over 50% switching. Today Cisco has well under 10% share of the available voice-data market.
Oh my.... lot's of room to grow!!!!
Well there will always be skeptics, but Cisco has the tools to make fundamental change in the way networks are deployed and operate. Anybody getting the picture yet?
OG |
