| BUSINESSWEEK ONLINE : SEPTEMBER 13, 1999 ISSUE | ||||||||
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| COVER STORY
Building John Chambers' New World Network Cisco may rule in corporate gear, but it's a relative startup in the telephone world, where it faces an uphill battle against the likes of Lucent and Nortel BIG CORPORATIONS The heart of Cisco Systems business is selling equipment that directs data around big corporate networks. Today, corporate gear makes up 55% of Cisco's $12.2 billion in revenues. A big boost is coming: On Aug. 31, IBM said it will resell more Cisco gear, which should add $6 billion to $7 billion to Cisco's sales over three years. CISCO'S MARKET SHARE 40% of the $16.5 billion market. PRIMARY COMPETITORS Cabletron Systems, 3Com, Nortel Networks. HOW CISCO STACKS UP King of the hill. Cisco is No. 1 in every category of corporate gear--and getting stronger because it's the ''safe'' purchase. Cisco uses IBM-style account control to keep customers in the fold. SMALL AND MEDIUM BUSINESSES Long ignored by most suppliers, small and medium businesses are now the fastest-growing market for corporate data-networking equipment. Cisco has launched an aggressive push into the field, lining up new distribution channels and hundreds of resellers. Chambers spends 10% of his time overseeing the initiative, and it's likely to grow to about 20% of revenues next year from 15% now. CISCO'S MARKET SHARE 18% of $13.6 billion market. COMPETITORS 3Com, Intel, Nortel, Alcatel. HOW CISCO STACKS UP Cisco aims to be the leader in gear for smaller businesses. But strong rivals like 3Com make it unlikely that Cisco will dominate. INTERNET SERVICE PROVIDERS Today, 80% of the Internet's routers, which direct data to the right destination on the Net, come from Cisco. The company also is strong in sophisticated data switches--often faster alternatives to routers. And it has gained ground in gear for linking individuals and companies to the Net. CISCO'S MARKET SHARE 33% of the $9 billion market. COMPETITORS Lucent, Nortel Networks, 3Com, Juniper Networks. HOW CISCO STACKS UP Its name is synonymous with the Internet, but Cisco faces tough competition. Startups are churning out zippier routers. Lucent and 3Com dominate Net access. And Cisco has only 21% of the data-switch market. Even so, this is Cisco's fastest-growing business. TELEPHONE COMPANIES As data and telephone networks converge, Cisco wants to transfer its dominance from the Net into the phone world. It has beefed up its products to carry voice and bought a handful of telco startups. Its $7.4 billion acquisitions of Cerent and Monterey Networks could move it deeper into the heart of big phone networks. CISCO'S MARKET SHARE Less than 1% of the $225 billion market. COMPETITORS Lucent, Nortel Networks, Alcatel, Siemens, Fujitsu. HOW CISCO STACKS UP New kid on the block. Cisco's Net-based technology will revolutionize the world's phone networks, but it won't happen overnight. Telephone companies trust Lucent and Nortel more because of their proven reliability. CONSUMER NETWORKING Hard to imagine, but the market for networking gear in the home could top $4 billion by 2002, from almost nothing in 1998. Cisco has licensed its technology to consumer-electronics giants like Sony so their products will work best on Cisco networks. CISCO'S MARKET SHARE 10% of the under $250 million market. COMPETITORS 3Com, Intel, Nortel. HOW CISCO STACKS UP Cisco has invested in several startups developing home-networking technology, and its list of licensees is a Who's Who of consumer-electronics companies. But 3Com and Intel are hell-bent on the same market, and they've got better name recognition and distribution. Analysts expect consumer products to be only 1% of Cisco's sales next year. DATA: PRUDENTIAL SECURITIES, CAHNERS IN-STAT GROUP _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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 RELATED ITEMS Meet Cisco's Mr. Internet COVER IMAGE: Cisco TABLE: Building John Chambers' New World Network RESUME: John Thomas Chambers PHOTO: John Chambers with Son John on a Fishing Trip TABLE: Cisco's Stock Rockets TABLE: The Tech Industry's Cookie Monster The Man Who Hones Cisco's Cutting Edge ONLINE ORIGINAL: Cisco Could Be the Safest Net Play Around INTERACT E-Mail to Business Week Online | |||
