The leader in this space almost chooses itself, given Cisco's huge lead over the competition. After that, there are a few obvious choices such as Juniper Networks, but for the most part there are a series of companies that could have made it onto our list just as well as those that did.
In the case of other mainstream networking vendors, for instance, Extreme has made it on but Foundry did not, largely because it is slightly bigger, but also because we believe Extreme has done a better job of preaching the 'collapsed' network gospel against Cisco, something some of the other vendors such as HP are also doing nowadays. 3Com made it on because they still have cash in the bank, are reducing their net losses and, through partnerships, could be on the way back.
We have also included some of the players in WAN optimisation and acceleration, as well as in the even more specific niche of wide area file services (WAFS), because it is our belief that getting better performance out of existing WAN infrastructure will become increasingly important over the next few years, particularly as more and more voice traffic is carried over IP networks.
3Com
3Com suffered greatly at the hands of Cisco in the late 1990s, to the point where it withdrew altogether from the enterprise market, concentrating instead on the SME space, for which it maintained a huge and well-trained channel organisation. It has had 14 successive quarters in the red, yet the bottom line is improving, and 3Com still has over $1bn in the bank.
Over the last year it has teamed up with Chinese manufacturer Huawei to produce the big core switch routers for enterprises again, and it now wants back into that market. It also partners with CrossBeam to sell multifunction security appliances, and late last year it snapped up IPS appliance vendor TippingPoint, a company Cisco admits to have taken a look at shortly before, and is making it the centre of its security strategy. Indeed, former CTO and chief strategy officer of TippingPoint, Marc Willebeek-LeMair, has just become CTO of 3Com.
3Com still has loyal customers and a channel, so if costs are coming back under control and the right partnerships are being struck, 3Com could be a stronger contender this year.
Cisco
Cisco is the clear, almost undisputed leader in data networking, enjoying such a dominant position and such huge revenue that, when it announced its gross margin had fallen below 70% earlier this year, stock markets across the world took a tumble, fretting that Cisco's performance reflected a global economy still too weak to sustain its historic profitability.
Cisco is still doing well, however, and even in markets where it is not the dominant player, such as storage and security, its moves still set all the other players scurrying to revise their strategic plans. As for innovation, Cisco can afford to buy it, and does so on a regular basis, snapping up feisty start-ups. And when it buys someone, like WLAN switch vendor Airespace at the beginning of this year, it vindicates an entire market, moving it overnight from the 'emerging' to the 'established' category.
As VoIP goes mainstream, expect Cisco to leverage its strength in the IP phone space: the market is playing to its strengths.
Expand
Within the optimisation and acceleration triumvirate is Expand, which while it lost some momentum last year, did so because it was porting its technology to Linux, a process that is now complete. Expand's Accelerator range of appliances can be remotely monitored and managed with the latest version of its console software ExpandView, which is likely to play favourably in companies setting up mesh networks to support distributed network workloads.
With Juniper having just snapped up a WAN optimisation player with its Peribit buy, there is speculation that Cisco will have to follow suit, particularly as it failed to develop the technology in-house as part of its Optimised Edge Router. In which case, it could go for Packeteer or Expand, but the latter has greater depth in areas such as long-distance traffic, which could tip the scales in its favour. Also, it is still privately held, whereas Packeteer is listed.
Extreme
While Cisco undoubtedly reigns supreme in switching, there are nonetheless a bevy of challengers for its throne. Extreme is one of the more visible in this market, and one that has been in the forefront of promoting the 'collapsed' network concept of core and edge, with no aggregation layer in the middle, as has traditionally been the case in network topologies. It has also been a leader in launching 10 GB capabilities in the core and in incorporating VoIP in a secure manner. We are rewarding Extreme for completeness of vision, particularly around the collapsed network architecture that 10 GB permits.
Hewlett-Packard
Hewlett-Packard is in the doldrums overall, losing its hold in the PC market to Dell and coming under siege in printers from the same company while its server and software business had a couple of tough quarters in 2004. Lurking within the Leviathan, however, is quite a reasonable networking division, HP ProCurve, which competes on price with Cisco in the switch market and has taken share from it as a result, particularly in EMEA, where it now ranks second. It has now turned its attention to branch office routers, where it intends to play the same game.
Juniper Networks
Mainstream networking companies such as 3Com have been eclipsed by Cisco, yet Juniper has given the 800 lb gorilla a run for its money in carrier routing, taking a healthy second place with about 30% of that market.
Last year it spent nearly $4bn to acquire NetScreen, a company that had been 'doing a Juniper' in the security market, selling appliances to encroach on a space hitherto virtually owned by Check Point.
This year it has made a couple of smaller acquisitions, Peribit and RedLine which, aside from giving it some interesting WAN and Web technology, served to vindicate what had until then been something of a niche market: WAN optimisation and application acceleration.
Nortel
The Canadian giant has had huge problems in recent years, having to announce a $19bn write-down on assets, then having to redo its books after a case of creative accounting was exposed. The damage to its image was huge, so much so that the UK's BT Group is thought to have excluded it from the supplier list for its £20bn ($36,5bn) 21st Century Network project because it still had not sorted those books out and washed away the whiff of scandal.
Still, Nortel is very much in the market for both corporate and carrier networking equipment, virtually dividing the North American market with Avaya, for instance.
Packeteer
The WAN optimisation and application acceleration market has been something of an interesting sideshow compared to mainstream networking, with the largest company in the space, Packeteer, on a run rate of just over $100m this year.
Part of the debate around these technologies is whether they are going to stay niche or go mainstream.
Naysayers argue that, once the world economy returns to sustained growth mode as it was in the 1990s, and customers have money burning holes in their pockets again, they will throw more bandwidth at any bottlenecks, rather than invest in technology to get better performance from the same size pipe.
Well, the world economy does not look like entering into another boom cycle any time soon, and all the signs in the IT market generally are of penny-pinching wherever possible.
As such, companies may now start to adopt WAN optimisation in larger numbers, and if they do, Packeteer probably has the highest visibility, being the only player already on the stock exchange. It started out with QoS then added compression, and last year it acquired application acceleration over satellite and long distances by buying Mentat.
Peribit
The leading challenger to Packeteer was Peribit when this list was drawn up, but in the intervening period that company has been acquired by Juniper, which served to put optimisation and acceleration on the map.
Peribit also does QoS and compression at Layer 5, as well as having all the acceleration techniques for Layer 7, where it has been adding more and more protocols that its technology can handle.
The big difference now is that it will go to market with Juniper, its technology continuing to be sold as standalone appliances and bundled onto Juniper's routers. There will also be a degree of integration of the WAN optimisation technology from Peribit and web acceleration from RedLine, enabling a more complete offering. And Peribit is already thinking about the next stage in its development, namely optimising and accelerating traffic in wireless WANs.
Riverbed
While the Packeteers and Peribits of this world have been optimising WAN traffic generally and accelerating applications running over the WAN, another group of companies including Riverbed have concentrated more specifically on optimising traffic onto and off storage devices over the WAN using WAFS.
In essence this means stripping out repeated code and sending it just once, while translating all the reduce amount of code left into a more efficient, proprietary protocol rather than CIFS or NFS, then retranslating it back at the other end. It is what they call WAN file serving at near-LAN speeds, which holds the promise of centralising storage at a remote site yet delivering data to remote users fast enough that they do not feel any significant degradation of the service compared to what they would experience were it stored locally.
The strategy was vindicated in July last year when Cisco acquired one of Riverbed's most serious competitors, Actona, thereby putting WAFS in the spotlight.
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