Jach -- You read way too many press releases. The 3Com release is a joke. They are claiming 27% market share in what amounts to a $22 million market. The same Dell'Oro report cites that Cisco has 56% market share in modular layer 2 gigabit ports. That market is cited as $30 million. Cabletron is barely on the map.
My only point here is that it's way too early to judge market share in the Gigabit Ethernet market. The market is tiny compared to Fast Ethernet, which last quarter was $804 million (Cisco has a 56% share of that market.) Another point on the 3Com release, just to try and convince you that this is just a creative spin job: 3Com claims "overall Ethernet port leadership" by including the millions of cheap NICs they sell. Gee, 3Com is the Ethernet switching leader because they get outsold by Cisco (by a lot) on switches, but are able to catch up by counting NICs. What a joke.
Cabletron is a company in trouble. You are right that margins will continually come down. Despite shriking margins, Cisco has still managed to stay above 65%. Why? The company's manufacturing system is without peer. Cisco sells just as many "low-end, low-margin" switches as 3Com now. Two years ago, Cisco was barely in this market. Shouldn't that have drove down Cisco's margins? Guess not.
Jach, no large service provider will base the entire production network on equipment from a start-up, IMHO. And frankly, if a start-up does get close to that kind of prospect, they'll be bought before you can say their name.
Final thought for you: Are you saying that six months to a year from now, Cisco will not realize any gains from data/voice/video opportunities? This is a huge market that is exploding. I know there are competitors, but like I've said before, it's not like Lucent or Nortel is going to gobble up all of the dollars in this space. If Cisco executes (and they have one hell of a track record with execution), the growth opportunities in converged networks far outstrip data networking margin pressure. To say tht Cisco will be facing hard times in a year because of start-up switch routers and margin pressure is only looking at 10% of the picture. You're still thinking in 2D.
Of course, you didn't respond to my last post directed at you. Guess you agreed with me. I won't hold my breath for a response here. |
