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Commoditisation threatens Cisco's networking dominance

Commoditisation threatens Cisco's networking dominance

The growing commoditization of switches and routers is creating a radical shift in the networking sector with the industry giant Cisco under serious threat from aggressive Chinese manufacturers.

Describing current market conditions as "open slather", Gartner's enterprise network infrastructure leader, Mark Fabbi said there is a real risk of Cisco becoming just another hardware vendor in Australia within 18 months.

Fabbi said Cisco has failed to innovate over the last five years and the company has spread itself too thin in the Australian market.

He said Cisco needs to deliver innovative software or be overshadowed by cheaper equipment made in Southeast Asia.

In a research note, to be delivered at the Gartner symposium from November 15 to 18, Fabbi said Cisco has had a comfortable run for a long time.

"When you look at its core market, it has just been Cisco and the seven dwarves - all those smaller competitors that have made it easy for the big guy," he said.

As a result, he said, Cisco has been less innovative in core areas instead adding more new technologies and expanding its slice of the pie. "Cisco has lost sight of the core business. But what it needs to do is transform from a primarily hardware shop to one where the focus is clearly software, that is moving out of its comfort zone," Fabbi said.

"Advancements have been made in the area of voice and the market will shift in one of two directions. Bigger players will enter the market and Juniper will go after Cisco on features and functionality.

"But the other threat is the rise of Asian-based vendors who will drive costs out of routing and switch products."

Cisco spokesman Peter Witts said the vendor is more innovative than ever, releasing more product recently than in the company's entire history.

With the launch of the Cisco Integrated Services Router, Witts said, integrated services routers are doing "sensationally well" in Australia. The Cisco Integrated Services Router is software specific to edge applications, allowing a router to forward packets based on the value of tags within those packets.

"And if you look more recently we have announced a new form of innovation aimed at organizations in the public safety arena, like fire brigades, using IP to communicate with each other, so innovation in both software and hardware is at the heart of what Cisco does," Witts said.


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