With Dell buying Force10 Networks, Brocade seeking a buyer and Alcatel-Lucent looking to shed its enterprise business, does anyone want to be in the networking industry anymore?
Which narrative would you like to believe?
- The networking industry is more competitive than ever with Cisco faltering and companies like Juniper and HP gaining market share.
- Cisco owns the market and everyone else is fighting for scraps, hoping to make a graceful exit.
Can they both be true? In recent years we’ve seen companies build up their networking portfolios in an effort to compete head-on with Cisco, only to make a quick exit after those efforts made them into an attractive target for acquisition.
As Henny Youngman might have said: Take my company. Please!
Remember when 3Com established H3C as a joint venture with Huawei, built up an impressive product portfolio, and then bought out Huawei’s share? Just two years ago 3Com was promising to blitz North America with the H3C brand and challenge Cisco. They were serious about the enterprise again, after abandoning their customers back in 2000. Six months later 3Com sold out to HP. Goodbye 3Com.
Remember Foundry Networks? Brocade bought the networking vendor three years ago. Brocade wanted to transform itself from a Fibre Channel networking vendor to a data center networking vendor and Foundry had the engineering talent and a loyal customer list to draw upon. Brocade has been aggressive since that acquisition, introducing its impressive new line of VDX data center switches. But acquisition rumors have swirled around the company for more than a year. And now Bloomberg is reporting that Dell had considered buying Brocade before passing over it in favor of Force10 Networks this week. Bloomberg added:
“Brocade has been looking for potential buyers with the assistance of Frank Quattrone’s Qatalyst Partners for the past two years…”
Two years… Take my company. Please!
And now we have Alcatel-Lucent (ALU), a company that has struggled in countless ways since the 2006 merger of Alcatel and Lucent. Every year or so, ALU announces that it’s going to reinvigorate its enterprise business. Every year, the effort falls flat. ALU executives emphasized the company’s latest enterprise business unit reinvigoration drive back in April when it announced a new data center network architecture that was, frankly, impressive. Yet, at the same time that they were telling me that ALU wanted to renew its enterprise focus, the Wall Street Journal was reporting that ALU was looking to sell the division. This week, ALU finally admitted that it is indeed weighing a sale.
Does anyone want to be in this business?
How are you, as a network engineer, supposed to navigate this environment? These companies work hard to earn your business. They develop good products, they invest heavily in sales and marketing, they prove themselves with technical support. They help you build your networks with their products, and then they sell out to the highest bidder leaving you with the uncertainty of dealing with a new vendor. Nortel customers found themselves transformed into Avaya customers. Foundry into Brocade. 3Com into HP. Force10 into Dell.
Most engineers play it safe. They stick with Cisco, which owns the market and isn’t going anywhere. HP Networking appears to be the safest alternative for longevity in the networking industry that we’ve seen in a long time. But things can change. CEOs turn over. Shareholders get restless.
Maybe things would be different if the global economy weren’t such a mess. But that’s the world we’re living in. The Great Recession is still in full swing, but the world still needs networks. So here you are. There are a dozen vendors out there asking you to choose them over Cisco. A lot of them make great products. Some of them make Cisco nervous. But some of them are eager to make an exit, and that’s a a risk you need to consider.
When a company exits the market, it usually argues, rightly or wrongly, that its customers will be better off with the new owner of the business. Force10 customers will benefit from the Dell deal, they say. Foundry customers have benefited from the Brocade deal, they insist. Avaya has done right by Nortel customers, they promise. All that could be true. But it’s not a guaranteed happy ending when your preferred network vendor sells out. If you were doing business with 3Com 12 years ago, you know how it feels when a company dumps you.