Cisco Winning Market Perception War

The service provider community around the world has spoken, and one thing is clear: Some of the stalwart incumbent equipment manufacturers of decades past are stalling out, while Cisco Systems Inc.'s (Nasdaq: CSCO) reputation has soared.

The $146 billion networking powerhouse has successfully transformed itself from an enterprise-focused vendor to the leading telecom supplier in the world, service providers believe.

That’s one of the main conclusions drawn in a new report, published today by Heavy Reading, Light Reading Inc.'s market research division.

The 150-page report -- the Heavy Reading 2003 Telecom Equipment Market Perception Study -- analyzes the results of the largest market perception study of telecommunications equipment and its manufacturers ever undertaken. Cisco "routs" most of its competitors in the survey, while the reputations of incumbents like Lucent Technologies Inc. (NYSE: LU) and Marconi Corp. plc (OTC: MONIY) appear to have passed a tipping point from which it may be impossible to recover.

Here are some details about the survey that spawned these controversial findings.

Heavy Reading’s study is the culmination of a three-month project that began on Light Reading with the publication of an article -- Who Makes What: Equipment 2003 -- inviting readers to help define the telecom equipment taxonomy that is published for the first time in the Heavy Reading 2003 Telecom Equipment Market Perception Study, and which identifies and defines 22 product categories and suppliers.

The taxonomy formed the basis of the largest market perception survey ever conducted in the telecom industry; 770 service provider employees representing more than 300 carriers worldwide responded. What came from those participants was a stunning amount of critical market perception data for 85 publicly held and 219 privately held telecom equipment vendors -- 304 companies in all. A full 40.8 percent of the respondents were from incumbent carriers -- the ones most equipment vendors target for having the largest and most stable capital spending budgets.

Overall, the Heavy Reading survey showed that, across all product categories, 19.4 percent of service providers consider Cisco to be the leader in price. 29.7 percent say its the No. 1 player in terms of product performance. Even more remarkable was that -- again, across all product categories -- 35 percent of respondents perceived that Cisco was the leader in quality, while a whopping 40.2 percent picked it as the leader in service and support.

The report slices and dices the results into various buckets, including overall rankings based on criteria such as company size and the number of product categories in which vendors play.

Table 1: Overall Perception Leaders
RANK Vendor Total Number of Categories Recognition Price Performance
1 Cisco Systems Inc. 20 81.5% 19.4% 29.7%
2 Nortel Networks Corp. 14 75.2% 10.7% 13.9%
3 Alcatel SA 18 64.5% 11.5% 12.1%
4 Lucent Technologies Inc. 15 68.0% 6.3% 9.5%
5 Fujitsu Ltd. 12 50.1% 6.6% 5.5%
Average Ratings Across All Products for Vendors Appearing in 10 or More Product Categories

Source: Heavy Reading

Table 2: Overall Perception Leaders, Part II
RANK Vendor Total Number of Categories Recognition Price Performance
1 Juniper Networks Inc. 5 63.8% 15.7% 22.9%
2 Ciena Corp. 6 59.7% 8.1% 11.0%
3 Extreme Networks Inc. 5 47.5% 12.1% 10.3%
4 Motorola Inc. 5 44.8% 7.7% 6.9%
5 Advanced Fibre Communications Inc. (AFC) 5 29.6% 9.9% 5.9%
Average Ratings Across All Products for Vendors Appearing in 5 to 9 Product Categories

Source: Heavy Reading

Cisco did not beat all in this ground-breaking survey. Its ratings in Europe were weaker than those in North America or Asia. But even there, it only did poorly in a couple of categories.

Nortel Networks Corp. (NYSE/Toronto: NT) beat Cisco in the Sonet MSPP (multiservice provisioning platform) category -- an area that began as the lynchpin of Cisco's service provider strategy. And service provider respondents felt that Juniper Networks Inc. (Nasdaq: JNPR) was superior to Cisco in two out of five core router performance metrics: price and performance.

The Heavy Reading survey will have implications for the marketing plans of telecom equipment vendors the world over. In addition to black-and-white answers and a wealth of quantitative statistical data, the survey also features areas where service provider participants candidly comment on the vendors they use and evaluate.

For instance, in the core router category, Cisco and Juniper received flattering comments. "Only Cisco and Juniper have really proven that they can cut it at this stage in terms of feature set and stability," writes one respondent. Another, however, writes that he was not impressed with Cisco's follow-through after completing an equipment sale: "Cisco will discount to whatever extent to get the business but everything else sucks."

Cisco did not respond to requests for comment on selected survey results.

— Phil Harvey, Senior Editor, Light Reading

To learn more about the report, including selected excerpts, please go here. The Heavy Reading 2003 Telecom Equipment Market Perception Study is priced at $4,950, and includes access to an online database allowing further analysis of all survey results according to search criteria such as geography, customer type, and respondent job title.

The product categories covered in the survey are:
Sonet and SDH Multiservice Provisioning Platforms, Metro Ethernet Equipment (including a separate study of Packet Ring Technology), Ethernet Access Equipment, 10-Gbit/s Ethernet Switches, Core Routers, Multiservice Switches, Edge Routers, Broadband Remote Access Servers, DSL Access Multiplexers, Equipment for Cable/MSO Networks, Third-Generation Digital Loop Carriers, Access/Metro DWDM Systems, Long-Haul DWDM Systems (including separate studies for terrestrial and submarine systems), Optical Switches, Softswitching/VOIP Equipment, IP Service Controllers (including separate studies for content switches/load balancers, traffic management devices, session controllers, and route optimization devices), Test Equipment, Fiber Access Equipment, Free-Space Optics, Broadband Home Gateways, Integrated Access Devices, and Video-Over-IP Equipment.

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spirit_of_voltaire 12/4/2012 | 11:23:03 PM
re: Cisco Winning Market Perception War
Marconi is not on the list??? I thought the BXR-4800 switch-router was rocking the core?
mboeing 12/4/2012 | 11:23:17 PM
re: Cisco Winning Market Perception War I would like to second the view on Cisco support.

I have been dealing with Cisco, Nortel and Lucent products during the last decade. Ciscos post-sales support is outstanding. In my experience support from Cisco TAC is always good. With other vendors support was either outstanding or miserable. With Cisco I did not experience this large variation in support quality.

newlegacy 12/4/2012 | 11:23:33 PM
re: Cisco Winning Market Perception War Does Lightreading say how they verified the employer affiliation of the respondents? Could it be Cisco marketing "wolves" in carrier sheep's clothing composed the lion's share of the responders (whew...three animals in one sentence!)?
Matthew Cramer 12/4/2012 | 11:23:34 PM
re: Cisco Winning Market Perception War if you really want to know how the survey was conducted and constructed, you might want to take a peek at the Survey Methodology:

vrparente 12/4/2012 | 11:23:35 PM
re: Cisco Winning Market Perception War Dear LR staff, et. al.

I do not intend to imply anything other than the request I posted. It is often the case that the results of surveys are in-intentional. For example, using open ended questions yields different results than with fixed choices. From what I can see it seems like you used fixed choices. I think that showing the surveys, which is certainly customary practice for any survey reports, would clarify this.

So for example, if you only listed those vendors shown on a short list we would know why only these vendors were shown, and not others.

opticaljester 12/4/2012 | 11:23:38 PM
re: Cisco Winning Market Perception War Not so fastGǪ If LR where to show you how they conducted the survey then everyone would know how inaccurate and biased the survey and this new research organization really are.

By the way, would LR post how much they need to get the price of CISCO stock up to so we can all place out buy/sell orders??
sgamble 12/4/2012 | 11:23:41 PM
re: Cisco Winning Market Perception War A little off topic perhaps...

I read somewhere, and I wish I could remember where, that a unnamed vendor is choosing to not load their line cards if their EPROM is not seen on a GBIC.

We buy Finisar GBICs in LX and LHA models. Because of the insane costs that vendors put on GBICs bought from them - Cisco, Foundry etc all do this, we have chosen to stick with the same vendor, Finisar GBICs, but not from Foundry. This means that there is not an EPROM (so when you do a "show media" you get nothing for non-Foundry Finisar GBICs).

I am wondering if any vendors like Cisco or Extreme or anyone else are actively using this approach to force customers into buying their GBICs by looking for their own EPROM? Just curious... It has come up a few times.

Thanks for the info. Sorry for the topic-hopping.

vrparente 12/4/2012 | 11:23:41 PM
re: Cisco Winning Market Perception War Administrative ...

Peter, et.al. How about posting a copy of the survey here ? I'd like to see the list of choices and the questions.

While I have you on the line. I think the feedback system is a great idea. Limited in that it doesn't allow feedback on (A) the article content (B) author, and (C) LR staff postings/responses, etc. In the end you could use this for your own internal use as well to see which authors your readers like -- accounting (in this case discounting) ratings from people (like employees) affiliated with the company being covered in the press.

Yours truly,
Victor Blake
Engineer and as it turns out Ph.D. student in education/sociology -- aka I know a thing or two about people, surveys, methods, etc.
Iipoed 12/4/2012 | 11:23:42 PM
re: Cisco Winning Market Perception War Sgamble-Gave you a 5 for your post. I worked for Foundry from 98 to 02. Outstanding company committment to customers. However your post really captured the difference between the two. Cisco can throw hundreds of people at the solution and most likely has inhouse case studies of customer's specific problems due to the sheer number of installs.
Foundry often sits at your site until the issue is satisfactorily addressed. Also keep in mind to escalate to Bobby Johnson a customer's concerns is a real option no matter the size of the customer.
Try contacting John Chambers.
You get what you pay for-Foundry provides Cutting edge technology (sometimes requires a little more patience), request for specific features are taken very seriously by Foundry's senior management, investment protection (10g blades work in a 4 year old BigIron without changing management modules or any other upgrades), and a 100% committment to making it right versus the mentality of "know one ever loses their job buying Cisco"
Peter Heywood 12/4/2012 | 11:23:42 PM
re: Cisco Winning Market Perception War On making sure we were getting the views of knowledgable folk in carriers:

1. The questionnare was in two parts. In the first part, folk were asked to check product categories where they were familiar with the vendors. In the second part, a questionnaire was built that only covered those product categories.

2. We also asked folk to say whether their company actually used products in that category, and whether they personally specified/procured said products. The database that comes with this report enables folk to look at the results exclusively from such respondents, if they so wish.

This wouldn't have been possible if it wasn't for the fact that we've collected an enormous amount of data from such a huge number of service providers.

It means the results are meaningful even when you start applying multiple filters - what are the views of respondents in corporate management positions in incumbent carriers in Western Europe, for instance.

The bottom line is that the scope for analyzing the results is endless.
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