Continued growth in the data centre network equipment market has opened a window of opportunity for vendors looking to cut into industry leader Cisco’s share, and, for those with the right products, “the time to strike is now,” one analyst said.
Given that the growth “should taper as buyers finish off their investment cycle and focus on other parts of their networks” by 2014, Barnett said vendors that have already begun chipping away at Cisco’s long-held lead in the market will have a good chance during that period to do some serious damage.
“Cisco lost its way,” Barnett said. “It simply invested in too many areas and neglected its core competencies — routing and switching. They realise that now and are re-aligning to address it.”
While Cisco scrambles to hang onto its lead, others in the data centre network equipment market are beginning to chomp at the bit. In the fourth quarter, HP continued to move in on Cisco in the data centre Ethernet switch market, with 38% revenue growth, while F5 padded its lead in the application delivery controller (ADC) sector with its own 20% growth.
Barnett said Cisco’s incumbency in customer data centres is the biggest barrier to entry for newcomers and points out that Cisco isn’t sitting back. Word recently leaked out that Cisco is incubating a software-defined network startup and Barnett expects Cisco to make acquisitions this year to bolster its data centre arsenal.
“I believe they will be more hesitant to jump on an acquisition these days unless it is truly a complement to their existing businesses and will allow them to leapfrog the competition,” Barnett said.
Regardless, Cisco can hardly afford a setback as F5, HP and Riverbed are all “eyeing adjacent markets,” Barnett says. With the current market environment and the expected flow of revenue in the next few years, the data centre network equipment sector could be up for grabs.
“The market will continue to grow at least through 2015,” Barnett says. “Cisco is watching its back. Even so, I still believe there is opportunity for others.”
