I haven’t tracked Ethernet share numbers for a while. Recent Gartner Dataquest information (3Q07) on the enterprise Ethernet market surprised me: Cisco share by ports has dropped to 37%.
So what gives?
Firstly, vendors other than Cisco have collectively shipped twice as many Ethernet ports as Cisco, and so two thirds of enterprises are either just saving money or, in the case of Nortel customers, recognizing improved network resilience, better network performance and lower TCO.
Secondly, given that Cisco’s share by revenue is 73% (not a typo), Cisco customers are paying way too much to Cisco; and customers who continue blindly buying from Cisco (just because “that’s what we have always done”) will continue to unnecessarily fill Cisco’s coffers.
Cisco is not going to lower their prices any time soon since they could lose 15% of their revenue base if their revenue share tracked their port share! In fact, as a mature technology, one would expect Ethernet prices to come down over the years …. my friends at Gartner tell me this is generally true but NOT for Cisco.
So what’s the bottom-line? If Cisco is only a 400 pound guerilla, then don’t feed him as if he were a 700 pound one! It may be time to look at how you can get more for your IT dollars.
This overweight guerilla roams the world. Have you put him on a diet in your neck of the woods?