Cisco Systems Inc. (Nasdaq: CSCO) remains the top dog in the minds of service providers, according to a market perception survey being released tomorrow by Heavy Reading, the paid research arm of Light Reading. That gives Cisco a twofer, as the company topped the previous Heavy Reading survey released late in 2003 (see Heavy Reading Surveys Telecom Vendors).
"Cisco is firmly entrenched in the minds of service provider buyers as the top wireline equipment vendor worldwide," the report states. "Brand recognition obviously plays a big role in Cisco’s mindshare dominance, but prospective buyers also see Cisco as setting the gold standard for service and support."
The survey consists of questions fielded by 160 participants representing 100 service providers worldwide.
That Cisco leads isn't all that surprising, considering the company hasn't burned to the ground since the 2003 survey. But the pressure from competitors Huawei Technologies Co. Ltd. and Juniper Networks Inc. (Nasdaq: JNPR) is building, and Cisco chief executive John Chambers is expecting more competition to arrive from Asia. That means tougher pricing and lower margins, bugaboos that probably contributed to Cisco's horizontal stock chart last year (see Chinese Competitors Chew at Cisco and Symantec Offers LiveState Recovery).
To accentuate the positive: Cisco fit into 16 product categories on the survey, the most of any vendor; Alcatel (NYSE: ALA; Paris: CGEP:PA) ranked a close second with 14. (Only one category excluded Cisco: DSLAMs and 3G digital loop carriers.) In terms of brand-name recognition, the respondents marked Cisco as the leader an average 72.5 percent of the time across those 16 categories.
Table 1: Top Telecom Vendors
|Source: Heavy Reading
Overall ranking is a combination of recognition, price, product performance, quality/reliability, and service/support.
Cisco was listed as a price leader an average of 21.2 percent of the time, lagging behind Huawei (33.8 percent) and Juniper (25.4 percent) -- further evidence that those two companies are aggressively challenging Cisco.
Juniper, in particular, is becoming Cisco's equal on multiple fronts. Cisco received top marks in quality and reliability, with an average 41.8 percent score, but Juniper was right behind with 41.1 percent. No one else was close; third-place Nortel Networks Ltd. (NYSE/Toronto: NT) scored just 24.6 percent.
In terms of product performance, Cisco again scored highest (42.2%). But Juniper was a close second (39.2%), well ahead of third-place finisher Alcatel (28.5%).
Cisco's weakness is its optical arsenal -- namely, optical switching, long-haul dense wavelength-division multiplexing (DWDM), and fiber-to-the-whatever (FTTx). It's a hole that's growing. "Cisco’s overall rating in both those sectors fell from the Fall 2003 survey, although it remains among the top five suppliers in mindshare even in those categories," the report states.
While the top five rankings saw little change, the next tier underwent a tectonic shift. Huawei leapt to No. 8 in the overall rankings, from No. 18 in 2003, and Siemens jumped to No. 7 from No. 13. Obviously this happened at somebody's expense: Ciena Corp. (Nasdaq: CIEN) dipped to No. 9 from No. 6, and Fujitsu Ltd. (OTC: FJTSY; Tokyo: 6702) fell to No. 12 from No. 8 in the previous survey. Adtran Inc. (Nasdaq: ADTN) and NEC Corp. (Nasdaq: NIPNY; Tokyo: 6701) likewise slipped in the new survey.
— Craig Matsumoto, Senior Editor, Light Reading
The Heavy Reading report, 2005 Wireline Telecom Equipment Market Perception Study, is available here.