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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: KYA27 who wrote (25056)	5/6/1999 6:39:00 PM
From: KYA27	Respond to of 77400

Cisco now says its MGX 8850 edge switch, which scales from 1.2G bit/sec to 45G bit/sec, can slide into the core. Indeed, Cisco customer Sprint always intended to use the MGX 8850 as its core switch for the ION network, a Sprint spokesman says. But it is still unclear whether the MGX 8850 is a tactical or strategic platform for the core. Cisco competitors say it is a limited tactical solution. At 1.2G bit/sec, the MGX 8850 currently lacks the horsepower for edge duty, let alone core. They say by the time the MGX 8850 scales to 45G bit/sec - which they believe to be in mid-2000 - it will have already been surpassed by other products. Cisco's strategic IP/ATM switch for the WAN core, competitors say, is a 120G to 190G bit/sec platform under development, code-named Jupiter. They expect Jupiter to ship in late 2000. There's also always the possibility that Cisco could acquire its way back into the WAN core by snapping up one of the gigabit/terabit router start-ups. Juniper and Avici may be hands-off,given that several Cisco rivals have equity stakes in Juniper, and Nortel owns 20% of Avici. But acquiring a router start-up at this stage would be a humbling experience for Cisco, observers say. It would signal that the $4 billion StrataCom acquisition did not pan out; and that Cisco, the worldwide leader in routers, did not have the wherewithal to develop a high-speed switching router for the WAN core - that "marries" IP and ATM - in a timely fashion. Whether Cisco acquires or Jupiter emerges, analysts say Cisco to date has been sending mixed messages to the market regarding its strategic technology for the WAN core, IP packets or ATM cells. Though Cisco claims to be "technology agnostic" - having no preference of one over another as long as they offer whatever the customer wants - the company has actually been downplaying the significance of ATM in next-generation data optimized networks. "Without a core switch, Cisco is going to continue to try and marginalize ATM, except at the edge," says Craig Johnson of The PITA Group in Portland, Ore. "It's to their advantage to do such a thing and to say that routers are where the intelligence is." "Cisco is still schizophrenic with regard to ATM and routing," says Tom Nolle, president of consultancy CIMI Corp. in Voorhees, N.J. "The strategies that they're talking about are not consistent with their product positions. The service providers are suspicious of people who they think are maybe talking out of both sides of their mouth." Indeed, Cisco is stating three different reasons for killing the TGX 8750, one of which is slow demand for OC-48 ATM in the WAN core, an assertion Cisco competitors and analysts say is ridiculous. "I don't agree with that," says Vertical's Cochran. "Certainly demand hasn't decreased from a year ago; if anything, it's increased." Cisco itself has underscored the OC-48 packet-over-SONET features of its 12000 GSR router as key to the product's selection by service providers Frontier, France Telecom, IXC, Swisscom and Enron...(cont)

To: KYA27 who wrote (25056)	5/6/1999 6:40:00 PM
From: KYA27	Read Replies (1) \| Respond to of 77400

Another reason Cisco gave for discontinuing the TGX 8750 is that it could not build a single product at price points that both enterprises and service providers expect. As a result, Cisco "bifurcated" TGX 8750 resources among the MGX 8850 and the Catalyst 8540 enterprise campus switch router. And Cisco's third reason, according to sources, is that the 20G bit/sec TGX 8750 no longer makes sense for the core when the MGX 8850 scales to 45G bit/sec. Observers say Cisco's three different explanations for the demise of its core IP/ATM switch indicates that the company's WAN switching strategy is just as scattershot-even three years after the StrataCom acquisition. This, along with the release of only one new WAN platform in three years and the apparent loss of frame relay market share, signals that Cisco has so far benefited little from StrataCom, and vice versa. The only apparent gain from StrataCom is that Cisco bought its way into the AT&T and Worldcom public frame relay networks. "They've renamed a bunch of products but I haven't seen much more than that," says Bob Bellman, president of BrookTrail Research in Natick, Mass. "Nothing exciting, anyway." So with a key piece of its WAN switching strategy missing, and another significantly delayed, Cisco's WAN switching vision is a blur. The company must regain its sight quickly because competitors like Ascend/Lucent, Newbridge and Nortel can make significant gains in the time it could take Cisco to develop - or acquire - and ship competitive products. "The real question is, where is Cisco in core ATM," says PITA Group's Johnson. Says a Cisco competitor, "Remember the theme 'Married: IP+ATM'? Looks like divorce papers have been issued by the lawyers of Cisco's routing group and StrataCom's switching group!"