It seems to be the consensus that your business has only two choices: disrupt, or be disrupted. Yet just days after writing the previous column, Infonetics’ Enterprise Networking and Communication Vendor Leadership Scorecard reported that just 8 vendors dominate the $50 billion enterprise communication infrastructure market. There are more than 100 vendors competing in this space, but only Alcatel-Lucent, Avaya, Brocade, Cisco, HP, Juniper, NEC, and Siemens Enterprise have a ‘diverse product offering and consistently capture more than 1% market share.’
If, as Forrester Research states, there are at least ten times as many innovators gunning for your business as compared to before, and the costs of entry are less than one-tenth what they were, you have to expect to be competing with 100 times the innovation power. Where have we seen this before?
Back at the dawn of the computing era, IBM dominated the mainframe market, with the Seven Dwarfs, a.k.a. the BUNCH — Burroughs, Univac, NCR, Control Data, and Honeywell (plus RCA and GE) — nipping at its heels. The mainframe begat the minicomputer which led to the PC, notebook, and today’s current dynamic duo, the tablet/smartphone. Along the way hundreds of companies have come — and mostly — gone, with only Big Blue surviving in a much smaller, but still profitable, mainframe arena. Apple, which disrupted the PC market with the Macintosh, the smartphone market with the iPhone, and the tablet market with the iPad, is one of a handful of survivors. Dell is another disruptor that hung in, although it is now struggling to reduce its dependence upon the commodity PC market.
Like the computer industry, networking has also had its epic upheavals. In the early 1980s AT&T bought NCR to try and compete in the computer business, and failed so miserably it ended up being acquired by a former business unit. Either seeking to emulate AT&T, or harking back to its early days of Not-Invented-Here Syndrome, IBM bought ROLM to compete in the voice switching market, with equal lack of success.
Things got a lot more interesting in the networking space a year ago when Cisco’s erstwhile converged infrastructure partner VMware (majority owned by EMC) anted up $1.26 billion for Nicira, Inc. Already the dominant virtualization vendor, VMware paid a stiff premium to acquire the very small developer of the Network Virtualization Platform (NVP), gambling that it will lead to a significant role in the emerging software-defined networking market.
It’s not a case of if SDN, but when. And SDN is not the only disruptor looming in the enterprise networking space, i.e. 400Gb/s Ethernet, software-defined data center (SDDC), and network functions virtualization (NFV).
While the jury is out on whether VMware or any of the countless other companies looking to disrupt the enterprise network market — and the Big 8 — will succeed (and the odds, and history, are that most won’t), the odds and history are some will.