In a recent interview with Network World (U.S.), 3Com CEO Bruce Claflin readily admitted that growth for the company in the foreseeable future will not come by way of sales of networking gear to new customers. Instead, it will be realized by taking business away from competitors.
That competition comes almost entirely in the form of Cisco, what with its profound dominance in the router and switch markets in North America. Although the statement will hardly come as an earth-shattering realization to members of your average cost-cutting IT department, it seems significant that even the traditionally rah-rah vendors have put their pom-poms down and have resigned themselves to today’s cold, hard reality: people just aren’t buying these days.
If the battle to satisfy shareholders is to be fought by altering the divisions of a stagnant overall market share, IT managers can expect to hear a good number of sales pitches with a “We’re better than these guys and here’s why” theme. It’s possible that the battle could start to resemble the messages heard during a political campaign where candidates cease to extol their own virtues and try to point out their competitors’ lack thereof.
Such approaches often backfire for politicians, and it seems that any effort to steal customers away from competitors, no matter what kind of message accompanies such endeavours, is going to be a Herculean one networking vendors.
There are numerous reasons why an IT department would not want to switch vendors. First and foremost, who wants to invest the time and effort that is required to carry out such a move effectively? Few managers welcome the prospect of conducting product comparisons and cost differentials, so an understandable lack of enthusiasm on their part is hurdle number one, and it’s a big one.
The focus will therefore have to be placed on customers who are on the cusp of a technological overhaul. And those customers will have to have had a fairly negative experience with their first choice of equipment in order to want to switch vendors. If everything has been humming along just fine with Router A, why switch to Router B?
For the equipment vendors that are looking to nip at the heels of Cisco, this isn’t going to be easy. Cisco has established a rock-solid reputation for having relatively easy-to-manage and reliable products. Combine that fact with a fairly ingrained reputation as the go-to networking equipment builder, and, suddenly, stealing John Chambers’ business becomes a tall task indeed.
On paper, price appears to be an obvious inroad to chipping away at Cisco’s market share; the firm’s pricing has rarely been referred to as “bargain-basement.” Can comparable gear be produced and sold for a lower price, however?
It will have to be if competitors want to attain a larger market share by whittling away Cisco’s. Other factors, such as scalability and support costs, to name but two, enter into buying decisions, but product reliability and price dominate purchasing decisions. Now it’s up to Cisco’s competitors to deliver the goods.