Cisco Takes the Top Position in Technology Business Research, Inc.
4Q98 NBQ Ranking; Industry Repositioning to Compete in Converging Data
and Voice Markets - BW, 09:01 a.m. Apr 16, 1999 Eastern
HAMPTON, N.H.--(BUSINESS WIRE)--April 16, 1999--Cisco Systems
(NASDAQ:CSCO) takes the top spot in TBR's (www.tbri.com) Network Business
Quarterly (NBQ) competitive benchmark ranking. Cisco's top rank is secured by its
leading market share, high manufacturing efficiencies, competitive products, and
excellent business model fundamentals based on revenue growth, margins, revenue
per employee, and financial leverage.NBQ Benchmark Index for Fourth Quarter 1998
4Q98 Rank 3Q98 Rank 3Q98 4Q98
#1 Cisco (NASDAQ:CSCO) #1 7.17 6.86
#2 3Com (NASDAQ:COMS) #3 5.23 5.47
#3 Intel (NASDAQ:INTC) #2 5.31 5.38
#4 HP (NYSE:HWP) #5 5.02 5.05
#5 Ascend (NASDAQ:ASND) #4 5.21 4.90
#6 Nortel (NYSE:NT)(TSE:NTL) #6 4.23 4.77
#7 IBM (NYSE:IBM) #8 3.91 4.32
#8 Cabletron (NYSE:CS) #7 4.18 4.11
#9 FORE (NASDAQ:FORE) #9 3.71 3.91 Source: TBR
3Com Corporation (NASDAQ:COMS) moved into the second position,
ahead of Intel, with stronger revenue growth year-to-year and
higher gross margins reflecting new product cycles as well as
improvements in supply-chain management and inventory turns.
Intel Corporation (NASDAQ:INTC) takes the third position by
applying its mass-market efficiencies to deliver low-cost commodity networking
equipment. In the fourth position, Hewlett-Packard Company (NYSE:HWP) has
expanded its presence in the data networking market with the introduction of
competitively priced ProCurve routing switches, along with extending key strategic
relationships with Cisco, EDS, and Lucent.
In fifth position, Ascend's (NASDAQ:ASND) business model fundamentals
weakened from the previous quarter, including inventory turns and expense control.
The pending Lucent (NYSE:LU) and Ascend powerhouse merger has dwarfed the
excitement of Ascend's recent acquisition of Stratus, which provides key technology
for penetrating the service-provider market. In sixth position, Nortel
(NYSE:NT)(TSE:NTL) showed improvement in three out of four of its key business
model metrics following implementation of its business realignment. Nortel
continues to integrate the products and operations of Bay Networks, as well as
transform its old telecom culture and entrenched labor force. In seventh position,
IBM (NYSE:IBM) continues to expand its solutions marketing program for Network
Hardware Division (NHD) networking equipment as a major component of the
corporate e-business strategy. TBR believes IBM's focus on higher-margin services
and OEM technology business will ultimately drive the direction of the company and
the fate of lower-margin product groups like NHD.
Despite some recent product successes in Layer 3 Switches, Cabletron's (NYSE:CS)
metrics, already the lowest in the industry, dropped further this quarter as expenses
grew and revenues weakened leaving the company in eighth position. FORE
Systems' (NASDAQ:FORE) ninth position ranking reflects its higher-end specialty
focus and expansionary plans to provide end-to-end solutions for mission-critical
networks. As a result, FORE's business model is under scrutiny due to its long-term
focus in a short-term technological environment.
TBR also produces a "non-scored" Industry Impact report on Lucent Technologies,
which will be merged with the Ascend report upon completion of the acquisition. At
that time, Lucent will be included in the NBQ Benchmark Ranking each quarter.
TBR believes Lucent has an exceptional opportunity to penetrate the converging data
and voice networking markets using its financial position, strong service
organization, customer base, and R&D capabilities.
"Internet usage and service models are becoming the critical differentiation factor in
next-generation data and voice networking infrastructures in reducing costs and
supporting new high-margin value-added services," said TBR's Director of Network
Business Quarterly, Bill Lesieur. "The differentiation factor goes well beyond
offering key billing and customer care solutions for Internet and voice-over-IP
usage, as these systems are likely to be linked to customer analysis and
personalization using one-to-one marketing." TBR believes Lucent can successfully
take its service model into data networking, while Cisco will be more challenged in
taking its products into the service market. To that end, Cisco is now seeking to use
HP to drive out a differentiated service model for its next-generation data and voice
infrastructures that supports value-added services. Nortel, like Lucent, also has
strategic interests in integrated billing for multiple service types, including supporting
the convergence of wireless and wireline services. TBR expects 3Com to deliver its
differentiated solutions based on its evolving relationship with Siemens and its new
U.S. identity of Unisphere. Overall, TBR believes the future industry structure and
power base will be largely dictated by service providers' preference in buying
next-generation voice/data networking and service models from Lucent versus Cisco
in the next 12 months.
Technology Business Research (TBR) has begun coverage of the data networking
equipment industry as part of a new service, Network Business Quarterly (NBQ).
The new NBQ service provides detailed analytical reports focused on 11 vendors
every quarter, analyzing their business performance and how their strategy
implementation affects it. These vendors are benchmarked based upon financial and
market metrics, leading to a Quarterly Benchmark report that graphically compares
and contrasts these companies and their various metrics. In addition to networking
equipment manufacturers, NBQ analyzes companies, such as Microsoft, which are
influencing this rapidly changing industry. Based on its unique business, financial,
and technical perspective, TBR is the industry leader in competitive benchmarking
that ranks vendors based on effective implementation of product strategy, marketing
strategy, manufacturing strategy, and business model. TBR clients include the
covered industries' vendors, suppliers, strategic partners, financial community, and
IT end-users. For more information, please visit the Technology Business Research
website at www.tbri.com.
Complete details are available to accredited journalists. For more information, please
visit TBR's website at tbri.com.
Copyright 1999, Business Wire
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