Posts Tagged networking
Barrons says the company is doing fine and the the stock selloff is overdone. As of FY087 EXTR had $225M in cash vs a current mkt cap of $350M. EXTR also owns is HQ in highly desireable Santa Clara, CA. Barronss states after backing out the tangibles, the core business is only vlaued at $100M. $5/share upside target.
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Read this piece on Network World. Really interesting.
What happened to Cisco’s competitors?
By Steve Taylor and Jim Metzler, Network World, 11/08/07
Jim and Steve are old enough to remember when the Goliath that is now Cisco had several viable competitors. While it is a stretch to say that today Cisco does not have any viable competitors in most of its traditional enterprise markets, it is only a bit of a stretch. The question this newsletter addresses is what happened to those competitors of yesterday and who if anybody can compete with Cisco in the future?
What impresses us most about Cisco is not its technology. In particular, over the years many competitors have had better technology than Cisco. One of the tragic flaws of many of those competitors is that they thought they would beat Cisco in the market just because they had better technology.
In general, that didn’t happen.
What impresses us most about Cisco is its ability to re-invent themselves.
In the mid-1990s Cisco was just a routing company. Along came LAN switching and Cisco did not have a product. Cisco bought its way into the market acquiring companies such as Kalpana and Grand Junction. At the time Cisco had some strong competitors. Bay Networks (remember them?) had just acquired a company called Rapid City which had a Layer 3 switch that was tested at 7 million packets a second back when that was a large number.
The Bay Networks products also had a gigabit Ethernet interface long before Cisco did. What happened to Bay Networks? One, it was acquired by Nortel, a company that really did not get the enterprise LAN market. Two, it did not execute well and subsequent products never lived up to their expectations.
But it is not fair to focus just on Bay Networks. In the mid 1990s, Cabletron was a close partner with Cisco. Then came the fateful day when Cabletron decided to very publicly declare war on Cisco. That was not its best move. And of course there was 3Com. Long before 3Com announced that it was exiting the enterprise business, Eric Benhamou, 3Com’s CEO lost interest in enterprise equipment and became fascinated by PDAs. Extreme Networks? It rose quickly but demonstrated the law of physics that says everything that goes up must come down. Juniper Networks? It clearly gets the service provider market but to date the enterprise marketplace is just not part of its DNA.
Today’s enterprise switch and router market is dominated by Cisco. HP is in second place, but seems to work hard to keep that a secret. Many of the other players are struggling to find a niche. We think that is regrettable.
In general, customers benefit when there is healthy competition, that does not describe the enterprise switch and router marketplace.
In the next two newsletters we will look at some other areas of the market to determine if Cisco is indeed the goliath of that market and if so, is there a viable David? In the meantime, we would like to hear from you. Are you concerned about Cisco’s dominance? What markets do you see that have healthy competition?
Now, check out the comments by some readers. Here’s one…
Submitted by Bryan Ruhf (not verified) on Thu, 11/08/2007 – 9:56am.
When one studies the story of David and Goliath, it talks about how long Goliath and the Philistines wreaked havoc on the King Saul and company; they shook in their boots and hid behind rocks. That included David’s brothers.
Yup, your recounting of the fallen is worthy of telling. I was a purist when it came to technology … my testing and research showed Cisco was far from perfect. But Cisco had learned well from IBM and it didn’t matter if their technology was the best. Just market and wine-n-dine the execs, and you’ll be the vendor of choice.
Years ago, IBM mainframes came under attack by a virus. Machines were falling down every where. My pager and phone were burning up; there was no fear though because we did not have an IBM mainframe. IBM took a nasty hit that day.
Goliath was arrogant when he faced David. He assumed no one could beat him, especially a little boy. Yet, David used a unique weapon to stop him and Goliath’s own sword to kill him.
Cisco has been arrogant for years. They believe they are invincible. I fear one day someone will create a new weapon and it will fall the mighty Cisco. My concern is that it will decimate networks from one coast to another. Very few will have learned to build fire breaks in their network.
As they have said in the past, it’s not a matter of “if” but “when”.
and another one…
Submitted by Bar (not verified) on Thu, 11/08/2007 – 11:55am.
I think it is disturbing that cisco have acquired such dominance that some companies don’t appear to be interested in investigating the market. As you say in your article “over the years many competitors have had better technology than Cisco”.
HP have certainly done a great job at keeping their second place position a secret – I certainly was not aware despite being a recent customer.
Don’t give up on Nortel though, certainly like HP they are very quiet about their offering, but I have just attended their Enterprise Technology Forum and I think they are beginning to “get it”. As for their product I urge anyone to look seriously at their Split Multi Link Trunking technology as it is the best resilience story I have seen. All they need now is cisco’s department of spin.