4Finger, regarding your comment <<I'm convinced we will not have a big four by 2000>>, check out this recent perspective by Gartner Group:
This article presents a high-level evaluation of the individual network vendors to assess the four networking vendor camps' strengths and weaknesses, with a wider scope than most enterprises perform or require. The evaluation provides an overall guide to help enterprises understand where each of the vendor camps stands in its organizational and product approach to the networking market. However, the information in this article should not be used as a replacement to an enterprise-specific evaluation.
The networking market for LAN, WAN and service provider equipment has consolidated into four major vendor camps with well-defined alliances and partnerships. Enterprises must start making decisions based on these new relationships.
Although a large number of major network players and a plethora of start-up companies exist today, we believe the networking industry has now consolidated into four significant vendor camps that can provide complete offerings across campus local-area network (LAN), wide-area network (WAN) and service provider markets. We believe all four vendor camps can provide comprehensive network solutions to meet the needs of any enterprise. These vendor camps will dominate all aspects of the networking market for the next five years (0.9 probability). Vendor partnerships once crossed natural boundaries with many conflicting partnerships; however, the period of "co-opetition" (a situation that occurs when the opposing forces of competition and cooperation meet) - <<This occurred with CS and CSCO>>> which was the normal business practice two to three years ago - is now over and clearly delineated partnerships have emerged to redefine the networking market.
The reality is that co-opetition is an unnatural relationship. Vendors are unwilling to share their value-added components with their competitors. We believe this vendor consolidation is a response to the enterprise requirement to provide a complete network solution. With technology discontinuities forcing a complete reworking of the entire enterprise infrastructure, leading vendors are now completing product offerings and consolidating their positions in the market. Figure 1 shows the four vendor camps and the relationships between the leading vendors and their spheres of influence that we expect will dominate the networking industry for the next five years.
Today, the overall networking market is large enough to support the four vendor camps and we expect all four will remain viable alternatives for the duration of the five-year planning period. The sphere of influence in three of the four camps is well defined, with Cisco Systems, Nortel and Lucent Technologies taking leading roles. Cisco can provide a complete data networking system on its own, the others rely on tight relationships to complete their solutions.
The Cisco Camp
Cisco dominates the data networking environment, and its next product generation will address the data networking paradigms necessary for the next-generation enterprise network. Through 2002, in the LAN segment, Cisco's full-function workgroup switches will be low-cost devices, while strong campus backbone products will facilitate packet or cell-based network implementations.
Cisco's recent acquisition of Telesend and Ardent, and its release of the Cisco 5300 and 3800 products in the access arena, improve the vendor's capabilities and move it into a market leadership position. In addition, Cisco's relationship with Alcatel for a voice segment product has not yet brought significant equipment to market. The voice segment is clearly the greatest weakness in the Cisco camp and must be comprehensively addressed by 2000.
In the wide-area network (WAN) and service provider space, the StrataCom product set will retain a strong position in asynchronous transfer mode (ATM) implementations at least through 2002 (0.9 probability).
In the Internet service provider (ISP) market, Cisco will remain the long-term leader; however, its slowness in introducing the Cisco 12000 product has left the door open for ATM switch vendors and vendors with other Layer 3 approaches to gain market share against Cisco. Finally, the voice portion of the service provider segment surfaces again as a weakness in the Cisco camp.
The Lucent Camp
Lucent Technologies' strength lies in voice products. Its strong voice application knowledge will enable the camp to retain a leadership position in the voice segment as distributed architecture voice products emerge through 2002. The LAN segment products are the primary domain of Bay Networks, although Lucent's acquisition of Prominet provides it with a Gigabit Ethernet product. In this camp, workgroup products have been addressed by Bay Networks, while the campus backbone area has products from both Bay Networks and Lucent where there is some overlap in the cell implementations.
In the WAN segment, Bay Networks and Lucent have arrived late to the battle for market share - in some cases, Lucent and Bay's products are six months to 12 months behind the features and "mind share" of the leaders in the WAN segment. Through Bay Networks, Lucent's relationship with Yurie Systems, Ascend Communications and AG Communications, and Lucent's acquisition of Livingston Enterprises, the Lucent camp has obtained access products. In the service provider segment, Lucent has a strong position in voice and transport segment but, despite recent product announcements, has not fully come to grips with its data strategies. The primary concern with the Lucent camp is the partnership between Lucent and Bay Networks. If this relationship changes, Lucent will struggle to remain a force if it decides to act alone in the data networking market.
The Nortel Camp
Like the Lucent camp, the Nortel camp is strong in the voice segment, with next-generation products already in beta testing. For the LAN segment, Nortel depends on Fore Systems and Cabletron for products. Cabletron has workgroup and campus products that have had some market success, but it may be challenged architecturally in larger networks. In addition, Cabletron's recent acquisition of Yago Systems indicates that Cabletron plans to refocus its Layer 3 strategies.
Fore's products, on the other hand, do a good job of addressing the campus backbone and parts of the WAN segment for cell implementations. The Nortel/Fore relationship is unusual because a tight product coupling exists without an equity position by either vendor - a situation that is a serious area of concern. The Nortel Magellan products will continue to have strong success in the WAN segment through 2002 (0.8 probability). In addition, the Shiva and NetSpeed relationships with Nortel, and the new Passport 4400 product, will make the Nortel camp a leader in the access segment.
In the service provider segment, Nortel has strong positions in the voice, transport and ATM services, but not in IP. The primary difference between the Nortel and Lucent camps is that Nortel has already had significant success in the WAN data market - Lucent has not.
The Siemens/Newbridge/3Com Camp
During the past few years, Siemens and Newbridge Networks have jointly developed strong ATM products in the service provider segment that complement Siemens' voice products. In the campus segment, 3Com has good products for cell and frame implementations, therefore, Newbridge will exit the campus segment, leaving the space to its "co-camp leader."
Newbridge and its affiliates, including Advanced Computer Communications, Bridgewater Systems, Cambrian Systems, Castleton Network Systems, CrossKeys Systems, FastLane Technologies, nCipher, Seabridge, Starvision Multimedia, Televitesse Systems, Telexis, TimeStep, Tundra Semiconductor, Ubiquity Software, Vienna Systems and West End Systems have a suite of products that have not garnered significant mind share in the enterprise WAN segment, despite some good products.
In the access segment, 3Com's acquisitions of U.S. Robotics and OnStream Networks, and Newbridge's Westell relationship, have given the Siemens/Newbridge/3Com camp a leadership position, while Siemens and its Rolm acquisition provide the camp with strong but not dominant voice products. Finally, the camp's recent carrier-scale internetworking and reseller announcements illustrate the increasing bonds between the three companies.
We expect vendors will now be tightly tied to a camp or used to fill product gaps within a camp's product line. In addition, we expect procuring complete solutions from the remaining Tier 2 vendors will become increasingly difficult and, over time, these vendors will suffer the same fate as networking vendors such as UB Networks and Digital Equipment. We believe start-up companies have little chance to emerge as independent vendors and will act as a competitive, "winner-take-all" research and development labs for the major players.
Enterprises must now start to consider strategic vendor relationships when making purchasing decisions. By 1999, enterprises that have purchased data network infrastructures from multiple vendor camps will expend up to an additional 25-percent effort for integration and management of their networks (0.8 probability). However, over the long term, we expect enterprises will incur substantial savings by using a single-vendor camp. We expect these savings will come from a variety of operational, technology and procurement items. A single-vendor camp can offer more value than a multivendor camp solution in many ways.
These values all relate to features, functions or capabilities that span multiple domains of a network solution or offer capabilities above those offered with standard interfaces. In turn, these enhanced capabilities can be translated into some form of financial benefit, operational improvement or competitive networking advantage. These include integrated network management, enhanced performance, specialized or proprietary network services, proprietary features or functions, enhanced operations and support, a single point of contact and escalation, simplified procurement, and proven interoperability.
While we believe buying from a single-vendor camp will have long-term benefits, each of the camps has potential weaknesses today. Cisco has no voice switching capabilities, and Nortel and Lucent need to acquire "mind share" in the campus network business and solidify partnerships in this area. In addition, we believe the Newbridge/Siemens/3Com "partnership-of-equals" will be difficult to manage without a clear strategic leader.
While the macro-level battle lines have been drawn, we still expect major changes will occur within our current alignment. Events that could affect the abilities of the vendor camps include: Fore being acquired by a vendor outside the Nortel camp; an acquisition of Ascend; Lucent attempting to "go it alone," leaving Bay to fend for itself or seek other partnerships; and a sleeping giant making the move to stake its claim to a part of the market. Today, all of the sleeping giants have the resources and many of the products required to succeed in this consolidated market; however, they currently lack the will and mind share. By 2002, at least one of the sleeping giants will emerge as a fifth viable alternative to the four vendor camps (0.6 probability). Enterprises should insist on dealing with the leader of each vendor camp to protect themselves from any shifts in vendor alignment.
Bottom Line: The industry has arrived at a technology discontinuity for all parts of the data and voice, LAN and WAN networking industries - we expect the technologies and vendor mixes enterprises are using today are not the technology and vendor mixes they will use three years from now. We believe each of the four vendor camps in our model will offer complete solutions of next-generation networking infrastructures for at least the next five years. The scope of the four vendor camps' solutions is broader than most enterprises' strategic network plans. Today, enterprises must build strategic plans that span the scope of all enterprise network requirements and then evaluate the vendor camps for strategic purchases. This once-in-a-network-lifetime opportunity must be used by an enterprise to choose a vendor camp that meets its requirements and then to leverage the acquisition process. An enterprise that fails to choose a strategic vendor camp will find that a vendor camp will choose the enterprise, forcing it into a single-vendor camp solution or an expensive multivendor camp integration. |
