"Networking Hardware -- Vendors talk telephony but make hay with Fast Ethernet"
May 18, 1999
COMPUTER RESELLER NEWS : As the networking hardware industry shifted to address the hype surrounding the convergence of voice, video and data on a single network, Cisco Systems Inc. retained its status as the top revenue-generating networking hardware vendor in the world.
3Com Corp. and Nortel Networks Corp. also kept their positions in the
ranking as the No. 2 and No. 3 Market Leaders, respectively.
"The market category that really drove the bulk of the revenue was
the 10/100-Mbit-per-second Ethernet switches, fixed and modular
configurations, " said Greg Collins, an analyst at The Dell'Oro Group,
Portola Valley, Calif. "The companies that saw the most benefit from
these products were Cisco, [Nortel] and 3Com."
Cisco, San Jose, Calif., saw its revenue jump 37 percent in 1998 to
$10 billion from $7.3 billion in 1997, according to Dell'Oro.
While Cisco took aim at traditional telco equipment manufacturers
such as Lucent Technologies Inc. and Nortel in the convergence
arena, it also kept its eye on the Internet equipment market.
During 1998, Cisco added voice capability to its WAN switches and
routers to make them "multiservice" and acquired a LAN telephony
company called Selsius Systems Inc. The multiservice products helped
Cisco win some deals in the service provider space and gave the
company equipment to sell to enterprises interested in adding voice
and video to their data infrastructure.
As it continued to play in the enterprise and break into the service
provider market, Cisco made forays into the small- to
midsize-business market. In fact, Cisco Chief Executive John
Chambers said his company's presence in this market was crucial to
its success in 1998.
"The Internet is . . . leveling the playing field for all small and
medium-sized businesses," Chambers said. "The increasing speeds of
Internet-based networks will deliver a competitive advantage for small
and medium-sized businesses, extending their reach worldwide."
Meanwhile, the channel's dominant networking player in the small- to
midsize-business sector, 3Com, Santa Clara, Calif., entered the
converged networking arena by adding voice support to some of its
switches and teaming with Siemens AG of Germany to develop LAN
telephony products.
Such partnerships were key to 3Com in 1998, said Jef Graham, senior
vice president and general manager of 3Com's personal connectivity
business unit. "We set out to build and establish key partnerships
throughout the year, " he said.
3Com experienced growth in enterprise products for small and midsize
businesses and in 10/100-Mbps workgroup hubs and switches, he
said. 3Com's calendar-year revenue rose 27 percent to $5.6 billion
from $4.4 billion in 1997.
Bay Networks entered the convergence landscape in a big way in
1998 when it was acquired for $9.6 billion by Northern Telecom Ltd.
(now Nortel Networks Corp.), one of the world's top telco equipment
makers, based near Toronto.
"Since then, Nortel Networks has continued to extend its lead, with
products and solutions that combine data and telephony
functionality," said David House, president of Nortel, whose
networking division is based in Santa Clara.
However, Nortel's calendar year networking revenue grew by only 4
percent to $2.4 billion in 1998.
Ascend Communications Inc., Alameda, Calif., No. 4, overtook
Cabletron Systems Inc., Rochester, N.H., No. 5, in the Market Leaders
ranking with revenue of $1.5 billion, up 53 percent for the year.
Cabletron's revenue remained flat year-over-year at $1.4 billion after
being too slow to market with switched Ethernet technology.
Ascend benefited from the trend of enterprises to outsource more of
their data networks to network service providers, which are big
customers of Ascend's high-speed networking equipment, said Ken
Fehrnstrom, vice president of business development for the company.
Copyright c 1999 CMP Media Inc.
By Kimberly Caisse
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