Cisco competitors catch the user eye despite old loyalties

Half of Cisco users will consider buying equipment from less expensive Cisco competitors even though these users believe in Cisco's products, according to a readership poll.

Cisco Systems' stock price is sliding, and tech bloggers are chiding the networking giant for losing its focus. With all the bad press Cisco has suffered, are customers losing faith?

SearchNetworking.com surveyed Cisco users last week to determine whether Cisco's recent dismal financial performance had affected their feelings about the company and its technology. The poll revealed that customers aren't necessarily losing faith in the company, but they are willing to try network equipment from Cisco competitors.

Of 107 SearchNetworking.com survey respondents, 65% said Cisco's poor financial performance had not changed their opinion of the company, and another 59% percent said negative media attention hadn't played a role either. What's more, the majority of respondents said Cisco products met their needs, including 83% for Cisco LAN switching product, 65% for Cisco WAN routers and 59% for Cisco data center switches.

But meeting user need may not be enough to fend off Cisco competitors. Twenty-six percent of respondents said they had replaced Cisco equipment with Juniper in the past six months, while 23% had invested in HP Networking and 18% had bought from Brocade Networks. About another 25% had replaced Cisco equipment with products from a smattering of other networking vendors, the most notable of which were Avaya at 7% and Arista Networks at 3%.

As Wall Street grumbles, Cisco competition tries to gain ground

Over the past five quarters, Cisco has reported steadily declining profits, and at press time the company's stock price had dropped 20% this year, hitting an all-time low of $15. That left Cisco trading at about half that of competitors Juniper Networks and Hewlett-Packard.

Wall Street analysts say Cisco could permanently lose ground in the switching market to competitors. As it is, the overall Ethernet switching market, where Cisco makes its bread and butter, declined 12% in revenue in Q1, according to Dell'Oro Group. Cisco's share of that market dropped to 68.2% in Q1 from 73.1% last year. Meanwhile, HP grew to 14.1% from 10% and Juniper held about the same at 2.4%.

Survey respondents who haven't already bought from Cisco competitors are open to the competitors’ sales pitches. Thirty-one percent of respondents are considering replacing part of their Cisco network with Juniper, another 20% are considering HP and 20% are looking at Brocade. About 10% said they would replace existing Cisco equipment with more products from Cisco, and 25% are looking at a range of other networking competitors.

Of respondents who said they recently replaced Cisco equipment with other vendors’ equipment, 60% said the move was due to price competition. Additionally, when asked to mark the statement “Cisco products are priced competitively” as true or false, 69% chose false.

A Cisco spokesperson said the company “acknowledges that the market is competitive” but that Cisco is “confident in its ability to execute in this kind of marketplace.” He also reiterated the long-time Cisco argument that the company's equipment may sometimes be pricier than the competition at the time of investment, but long-term operational efficiencies lead to savings. Capital investment is only 15% of the cost a network, while long-term operational expenses makes up 85% of the cost. Cisco, he said, wins out in the long term.

Cisco execs also claim that while equipment can be more costly, it is technically superior than the competition. However, 42% of Cisco users who have opted to replace Cisco equipment in parts of the network said the shift was due to “features and functionality,” while another 23% said it was because of product quality, according to the SearchNetworking survey. Seventy percent of respondents agreed with this statement: “Other vendors produce networking technology as good as Cisco.” Beyond product quality and pricing, 22% of respondents said they replaced Cisco with competitive products due to “product support and related services,” while another 23% said it was due to “long-term vision.”

Is the Cisco single-vendor network what users want?

Cisco has been harshly criticized by technology analysts for having multiple complex operating systems throughout the network and for working with proprietary protocols that limit users from building multivendor networks. Cisco has said multivendor networks aren't as efficient and can't enable complex network strategies, such as Unified Computing System (UCS). That theory seems to hold true for about half of SearchNetworking.com's survey respondents, with 48% saying they prefer a single-vendor network, while 32% favor multivendor networks and 18% don't believe it's an important issue.

In some markets abroad, Cisco competitors can't compete yet

Cisco holds an even more dominant market share abroad than it does in the U.S., and that is largely due to the company's meticulous work in training engineers internationally, including in underserved countries. Anecdotally, it appears that Cisco is not yet losing ground in these markets.

Solution architect Robert Pradeep, who works for systems integrator Redington, said other vendors are setting up shop in the markets he serves across Africa and Asia, but they're no threat to Cisco.

“I tried Juniper, Cisco and Avaya and all the products are good, but I am very comfortable with Cisco technology, so I stick with it,” said Pradeep, who responded to the SearchNetworking.com survey and was contacted for an interview in Kenya, where Cisco holds an 80% networking market share. “Ninety-nine percent of [networking professionals] have Cisco knowledge here.”

The same doesn't hold true yet for blade servers and other data center technologies where Cisco is pushing hard to gain more ground internationally.

“UCS is not so common here because it maps at the high end of the market. Companies here are smaller and HP servers are cheaper,” Pradeep said. HP also has lots of data center trained engineers in Pradeep's markets.

Cisco certifications hold value despite Cisco's competition, financial woes

Cisco's steep competition and financial troubles don't seem to have diminished the weight of having a Cisco certification. Fifty-seven percent of SearchNetworking.com survey respondents said Cisco certifications are valuable to their careers, and another 12% said they are valuable, though less so than in the past. Another 12% said Cisco certifications are not at all valuable.

Francis Chithila, a survey respondent in Malawi, who is about to sit for a CCNA certification, said he is aware of Cisco's troubled financial performance, but that in no way diminishes the weight of a Cisco certification.

“When Malawians take a qualification from Cisco, they feel it is recognized unlike any other,” Chithila said.

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