re: Cisco, Juniper Go to the MatWhen you start pricing products at a lower margin in order to eliminate competition, you start having a monopoly. If you can control industry prices, you have a monopoly, regardless of market share. If Cisco is not careful, they could be the next Microsoft, attracting the DoJ's attention.
re: Cisco, Juniper Go to the MatWhen you start pricing products at a lower margin in order to eliminate competition, you start having a monopoly. If you can control industry prices, you have a monopoly, regardless of market share. If Cisco is not careful, they could be the next Microsoft, attracting the DoJ's attention.
Not sure where you learned economics, but predatory pricing only comes into effect IF you have a monopoly. It does not imply a monopoly.
Now, if you were at all aware of what is going on in the industry you would see that these companies are sitting on huge unsold inventories. What is the best way to get rid of excess inventory in a tough market? Sell it cheap. How do we know this is happening? Lowered margins. Cisco, Nortel, even Juniper, they are all doing it.
re: Cisco, Juniper Go to the MatWhen you start pricing products at a lower margin in order to eliminate competition, you start having a monopoly. If you can control industry prices, you have a monopoly, regardless of market share. If Cisco is not careful, they could be the next Microsoft, attracting the DoJ's attention.
Not sure where you learned economics, but predatory pricing only comes into effect IF you have a monopoly. It does not imply a monopoly.
Now, if you were at all aware of what is going on in the industry you would see that these companies are sitting on huge unsold inventories. What is the best way to get rid of excess inventory in a tough market? Sell it cheap. How do we know this is happening? Lowered margins. Cisco, Nortel, even Juniper, they are all doing it.
re: Cisco, Juniper Go to the MatCisco has 66% of core router market. If it uses its dominant market position, and predatory pricing tactics to eliminate competition, then Cisco would be behaving as a monopolist. Are they? That's for the DoJ to determine and the courts to decide. They sure do act like Microsoft from time to time.
re: Cisco, Juniper Go to the MatJuniper's product is comparable to Cisco's, and how did they gain market share? By cutting prices lower than Cisco's. That's not a monopoly, that's competition! So why do you think playing by the same rules, Cisco is trying to become a monopoly? You can't have it both ways! Now, if Cisco starts selling below cost, you might have a case, but that's not what they are doing. Your statement that lowering prices to eliminate competition makes you have a monopoly is wrong. Better read the law before making statements like that, your ignorance is showing.
Author: voyeur Number: 3 Subject: Re: How to you spell monopoly Date: 8/9/2001 10:38:14 AM
When you start pricing products at a lower margin in order to eliminate competition, you start having a monopoly. If you can control industry prices, you have a monopoly, regardless of market share. If Cisco is not careful, they could be the next Microsoft, attracting the DoJ's attention.
re: Cisco, Juniper Go to the MatThe claims point to a vicious price war that may be escalating between the two companies as service providers continue to tighten their belts.
First you say that Cisco stole market share through price cutting.
However, a jump in high-end router market share shouldn't surprise anyone, says Kamman. Juniper released its OC192 (10 Gbit/s) router first, and it had the market all to itself, he says. But service providers want more than one supplier for their equipment, so it's natural that Cisco would sell some systems and take back some market share.
They you have a quote saying they stole it back with their 10gig cards.
Since both CSCO and JNPR are cutting prices, the first assertion is likely not the cause.
That leaves the second assertion, and despite the fact that JNPR won the LR test, perhaps customers got tired of the only 10gig solution out there reordering their packets?
re: Cisco, Juniper Go to the MatCisco is not a monopoly, not by any stretch of the imagination. 66% share, while making Cisco dominant, does not make them immune to pricing pressure, which is government's rule of thumb.
If Cisco could raise prices without losing market share, then Cisco would be a monopoly. Clearly that is not the case, but that's not all that has to be proven. In order for the government to get involved, there has to be an abuse of that monopoly power, such as raising prices or stifling competition- the threat of consumer harm is not enough, there actually has to be an overt act that results in consumer harm.
re: Cisco, Juniper Go to the MatOk, let's use the Microsoft analogy a little further. When Netscape came out, they were ahead because they were there first with something the customer wanted and had the market all to themselves. Then along come MSFT with there me-too IE. Low and behold, they eventually quash Netscape by lowering their margin and shipping it free!!! They get nailed by Jackson, and even though the appeals court overturned the remedy, the finding stands.
Fast forward to CSCO/JNPR. JNPR gets to the market first, CSCO follows. In order to gain market share, they squeeze their margins and force JNPR to do the same, hurting their business. So is the analogy that far off?
Lopez - So the assertions from post #7 are not necessarily mutually exclusive or contradictory.
brichter - Juniper didn't gain market share necessarily by cutting prices but by getting their 10G product out first (a la Netscape). When CSCO starts lowering prices, they are acting like a monopolist since they could afford to do so due to their other revenue and bankroll (a la MSFT).
cfaller - Market share is not the only rule of thumb, nor should it. But if CSCO starts pricing to lower the margins of competitors and eventually takes them out, it is a problem. Not only for the competing companies, but in that it stifles innovation. That was the main issue in MSFT, stifling innovation. Let's be honest, getting IE for free was great for the consumer, but when software companies had to worry about not raising the ire of MSFT, that was bad for innovation and new products.
hitechguy
Not sure where you learned economics, but predatory pricing only comes into effect IF you have a monopoly. It does not imply a monopoly.
Now, if you were at all aware of what is going on in the industry you would see that these companies are sitting on huge unsold inventories. What is the best way to get rid of excess inventory in a tough market? Sell it cheap. How do we know this is happening? Lowered margins. Cisco, Nortel, even Juniper, they are all doing it.
Not sure where you learned economics, but predatory pricing only comes into effect IF you have a monopoly. It does not imply a monopoly.
Now, if you were at all aware of what is going on in the industry you would see that these companies are sitting on huge unsold inventories. What is the best way to get rid of excess inventory in a tough market? Sell it cheap. How do we know this is happening? Lowered margins. Cisco, Nortel, even Juniper, they are all doing it.
You can't have it both ways! Now, if Cisco starts selling below cost, you might have a case, but that's not what they are doing. Your statement that lowering prices to eliminate competition makes you have a monopoly is wrong. Better read the law before making statements like that, your ignorance is showing.
Author: voyeur
Number: 3
Subject: Re: How to you spell monopoly
Date: 8/9/2001 10:38:14 AM
When you start pricing products at a lower margin in order to eliminate
competition, you start having a monopoly. If you can control industry
prices, you have a monopoly, regardless of market share. If Cisco is not
careful, they could be the next Microsoft, attracting the DoJ's attention.
First you say that Cisco stole market share through price cutting.
However, a jump in high-end router market share shouldn't surprise anyone, says Kamman. Juniper released its OC192 (10 Gbit/s) router first, and it had the market all to itself, he says. But service providers want more than one supplier for their equipment, so it's natural that Cisco would sell some systems and take back some market share.
They you have a quote saying they stole it back with their 10gig cards.
Since both CSCO and JNPR are cutting prices, the first assertion is likely not the cause.
That leaves the second assertion, and despite the fact that JNPR won the LR test, perhaps customers got tired of the only 10gig solution out there reordering their packets?
If Cisco could raise prices without losing market share, then Cisco would be a monopoly. Clearly that is not the case, but that's not all that has to be proven. In order for the government to get involved, there has to be an abuse of that monopoly power, such as raising prices or stifling competition- the threat of consumer harm is not enough, there actually has to be an overt act that results in consumer harm.
Fast forward to CSCO/JNPR. JNPR gets to the market first, CSCO follows. In order to gain market share, they squeeze their margins and force JNPR to do the same, hurting their business. So is the analogy that far off?
Lopez - So the assertions from post #7 are not necessarily mutually exclusive or contradictory.
brichter - Juniper didn't gain market share necessarily by cutting prices but by getting their 10G product out first (a la Netscape). When CSCO starts lowering prices, they are acting like a monopolist since they could afford to do so due to their other revenue and bankroll (a la MSFT).
cfaller - Market share is not the only rule of thumb, nor should it. But if CSCO starts pricing to lower the margins of competitors and eventually takes them out, it is a problem. Not only for the competing companies, but in that it stifles innovation. That was the main issue in MSFT, stifling innovation. Let's be honest, getting IE for free was great for the consumer, but when software companies had to worry about not raising the ire of MSFT, that was bad for innovation and new products.