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Mon 28 May 2007 04:00 AM

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Differentiate or die

Networking players have to make their own niches by going beyond the commoditised layer and providing solutions for specific customer needs, in order to carve more out of the market for themselves.

|~||~||~|The problem with virtual monopolies is that it is pretty easy not to like them, very easy to predict their decline is right around the corner, and extremely hard to ignore them. In fact, so hard that it could come to dominate the way you think and operate on a daily basis.

Over the last month I had the opportunity to meet executives from two well-known networking companies.

One was the CEO of 3Com, Edgar Masri. About to finish a year in the company, the top executive was in the region to meet customers and governments and to plan the company’s next steps in the region (read his exclusive interview with NME in next month’s issue).

The other involved a group of top EMEA executives from fast-growing Juniper Networks, on the eve of its partner conference (again, look out for our report in NME’s June edition).

At these meetings, through various presentations and across different strategy and product discussions, hung the perceptible shadow of the biggest networking player yet, Cisco.

In a highly competitive field such as networking, it is inevitable that discussions among established yet smaller vendors will often concentrate on the market share leader. It is rather natural that parts of their product and marketing strategy will either depend on or borrow bits from the activities of the bigger concern.

It is even more understandable when one considers that most of the customers being wooed by the smaller players are, more often than not, already customers of Cisco.

Most of the time, these vendors have to be happy with gleaning a few customers away from the networking behemoth or sharing space in a mixed environment as companies often choose the best bits from each vendor.

Consequently, many of their tactics are designed not only to get the most out of a single enterprise customer, but also to get as much business as possible away from the bigger player.

Both of these networking players reiterated that Cisco is spreading itself too thin and that this would affect its image with customers. To me though, all these meetings seemed to emphasise that Cisco is in quite a safe corner with its healthy market leadership.

When one company can command overwhelming mindshare and be a part of strategy considerations for names that are considered its biggest and most promising competition, then I would say we are truly talking about a market that is one-sided. This in turn does not reflect too well for the enterprise customer.

Networking brands have to rid themselves fast of the impulse to compete on Cisco’s terms, and work on independent products and solutions that look for and address unique customer demands, if they really want a bigger share of the market.

Moving beyond the layer of networking that is commoditised, understanding current gaps between customer needs and solutions, and bridging that gap adequately, can be more critical to eventual success than strategies based on competitor analysis and weaknesses.

Such focus can give access to defined niches for networking vendors, provide true differentiation and help them build their brands in their own rights, without undue comparison either among themselves or, more importantly, among customers.

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