To: gfr fan who wrote (36759 ) 12/2/1999 3:06:00 PM From: Mehrdad Arya Read Replies (1) | Respond to
gfr, I was discussing their current position, not their past or future. I am certain the router market will be an area they will focus on after the spin-off, among many other things. MA - you're wrong, sorry. COMS had at one time the best routing code, after buying Bridge - they didn't exploit this, EB has admitted this. Second, COMS' enterprise group fiercely competes for router deals, and they do have some large prestigious accounts, but the product pipeline has pretty much dried up. The lack of router share is an achilles heel - routers are extremely high margin, and more importantly this one product in particular pulls along most other pieces of the enterprise and carrier (to a lesser extent) purchases. This explains why CSCO is growing at 30%+ yoy - they own the most complex piece of the puzzle (routers) and that has allowed them to become #1 in other areas - switches, remote access, etc. been their achilles heel, but their destiny would equally be hazardous if they were to waste resources challenging a competitor like Cisco that has a practical monopoly in the Router market. For this reason the company chose to focus its resources in R&D, $600 million a year, in the emerging market. The results are manifested in their repertoire of patents and products currently on the market.The challenge that COMS has is to develop and keep lead in their emerging markets - VOIP, LAN telephony, wireless, but my assessment is that they will not be able to keep pace with CSCO in the VOIP and LAN telephony areas but they may in wireless and the broadband CPE side. However, wireless and broadband are less than 10% of total revenues, and broadband CPE will be viewed as a commodity. So, COMS after Palm, will have to probably acquire some high growth businesses or be acquired - otherwise the current company w/o Palm will be growing at single digit or low double digit rates as a whole for the next 4-6 quarters.
