The networking market seldom stands still. This time last year, however, it was in one of its rare doldrums. The deadening effect of the year 2000 slowdown seemed to combine with endless 'jam tomorrow' promises from vendors to create an atmosphere of inertia.
But things have now perked up somewhat. Serious progress has been made in the development of several important technologies, and corporates the world over seem more eager than ever to build their infrastructures, use the internet for commerce, converge their voice and data networks and spend money making them secure, while ensuring that data is stored to allow speedy access.
Last year, storage area networks (SANs) and network attached storage were dodgy jargon; now, they are the way forward. A year ago, wireless technology still seemed highly theoretical and untried; now, standards such as Bluetooth have matured and are making it seem frighteningly possible.
If it seems to be a good time to resell networking solutions and services, then tomorrow might be something else.
Andrew Shepperd, general manager of networking at distributor Computer 2000, feels that the best is yet to come. "This year, we have seen a revolution in the networking market, and next year will probably be the same. We have seen a whole lot of new technologies and new vendor startups with new ideas. This year is probably the most exciting in networking in the last five," he explained.
Shepperd cites the growth of wireless infrastructure as a good example of the activity. "[Industry analyst] Gartner estimates that there has been a 416 per cent growth in wireless infrastructure this year," he said.
He also believes that other technologies, including Bluetooth and Wap, will increasingly affect corporate networks. "People keep telling me that Wap is dead, but it has barely started, for God's sake. The wider availability of better devices should start to help it expand next year. Bluetooth also has some ultra low-cost devices coming down the pipeline, as well as special servers to manage the connection. These are good examples of the trend towards more easy to attach, plug-and-play appliances for point solutions," he said.
Shepperd is one of many who consider security to be an integral element of networking policy. "Security is going to grow and grow and grow," he explained. "The two most exciting technologies are encryption and intrusion detection. The latter, in particular, is on the way up thanks to high-profile breaches such as the one Microsoft suffered. It made everyone think: 'If it can happen to them, what about us?'."
The lifting of US government regulations on encryption also looks set to open up the market. "For resellers getting into managed services and hosting content and servers, encryption will be vital at all levels. Corporates need a fix for security problems and paranoia is not an option," he said.
Another growth area anticipated by many is network management. "This is probably the most undersold technology on the market, and yet it is one that we have almost a responsibility to sell," said Shepperd. "At present, only 15 per cent of NT servers are managed, which amounts to a great opportunity for resellers."
Shepperd believes that the networking market of the future is so broad that no single vendor will be able to dominate it in the same way as Cisco has. "In future, many vendors will be involved in the overall solution. Some will specialise in security, some in wireless technology, some in infrastructure," he said.
"Resellers will also need to reposition. They need to examine what kind of services they offer, because these days so many services are common or even legacy. Installing an NT server is the kind of thing that is done in-house these days. Web services are one way forward, as are commercial business-led services," he concluded.
Richard Prior Jones, managing director at Azlan Europe, cites convergence technologies such as voice over IP (VoIP) as growth markets in the next year or two. "A lot of people are running VoIP pilots at present. Once these tests are complete, the market will explode. The technology will be robust by then," he said.
Prior Jones also believes that convergence is having a profound effect on the channel. "The independent, technology-led integrator is practically extinct," he said. "Integrators now need skills to support communication infrastructure. Similarly, server resellers need to think about transitioning themselves to an application service provider model. We are selling to different types of people, and they will be quite different in two years' time. In fact, the next two years are going to be a lot more exciting than the last two in terms of new technologies."
If the networking market of the past five years had to be summed up in one word, it would have to be 'Cisco'. Vital to the future of networking, and to the future of resellers making a living out of networking, is whether that colossus is able to remain as dominant in the next five years. Its ability to deal with hot issues such as convergence should determine this, but the signs have been mixed so far.
Undoubtedly, Cisco has been slow to address converged voice and data, and many smaller vendors have become big and strong by taking advantage of this tardiness. Cisco is now playing catch-up and is bidding for control of the communications infrastructure market.
When the company announced a deal with systems giant NEC in September to jointly market internet-based phone technology, it gave a strong hint as to how it sees its future.
Although few carriers or their corporate customers currently use such technology, preferring to stick with traditional equipment vendors such as Lucent and Nortel, Cisco has been trying for some time to get ahead in what it believes will be the next generation of communications technology.
Cisco believes that web-based telecoms equipment is already cheaper than traditional alternatives, but now it claims that integrating its new Avvid range of voice devices with NEC's software will result in a compelling offering for customers.
In a separate move, Cisco has also outlined plans to internally develop technology that can send web traffic long distances over fibre optic links. The vendor's slowness in entering the long-distance optical network market has been seen by analysts as a chink in its armour, especially as Nortel is strong in the sector.
However, Cisco is still doing well overall, although not as well as its rivals in certain key areas. Turnover is not growing as fast as that of Juniper, which has grabbed almost 23 per cent of the high-end router market in the past two years. Juniper is now trying to extend its reach into Cisco's traditional heartland by coming out with its new M5 and M10 routers.
Cisco achieved its position in the router market by delivering products that supported every possible combination of protocols and interfaces at a time when there was a general lack of standards. But the industry has changed since then, and this capability is no longer special.
Customers also have new expectations. Internet service providers want to be able to use IP filtering without losing system performance, and Juniper's products have proved well up to such tasks. The density of Juniper's routers means that they also have smaller footprints.
However, Paul Cunningham, marketing director at Cisco distributor Comstor, said: "Cisco has done a good job of taking its acquisitions and making a whole out of the parts. It hasn't missed the convergence boat at all. Its wireless local area networks and IP telephony products are well positioned in the key areas, such as security and content switching."
It would be wrong to see the networking market of the future as simply a contest between Cisco and the rest over control of communications infrastructure. Other leading vendors are engaged in equally serious struggles.
Sun Microsystems is raising the stakes in the wireless market with a dedicated business unit and a $100m (£70m) venture fund for companies creating wireless technologies. The new division will have its own engineers as well as marketing and business development staff. Sun has also launched a new communications server for telcos to provide wireless services.
But the vendor's move is, in fact, the latest in an accelerating spiral of investment from a host of traditional datacoms vendors bidding for a share in tomorrow's converged market.
IBM has also announced a new product, a server similar to Sun's, as well as new software and services. It has also recently signed deals with BT Cellnet, Telecom Italia, AVenir, UniXS and others. The market for wireless computing infrastructure has also attracted the attentions of Hewlett Packard (HP), which has had its own wireless hardware, software and services for over a year.
And Compaq, although behind Sun, HP and IBM as a Unix server vendor, has done well in the telecoms server market. For Sun, IBM, HP and others, the battle now is to replace mobile phones with third-generation models. Higher data transfer speeds, combined with the increasing computing power of mobile phones, handhelds and pagers, mean that mobile phones will compete more effectively with ordinary PCs.
If wireless solutions and security are to be regarded now as crucial parts of the networks of the future, then so too is storage.
The emergence of fibre channel and SAN technologies have enabled companies to bring back centralised storage by extending the distance between servers and storage facilities. Dense wave division multiplexing (DWDM) has also allowed networking capacity to grow at the same rate as storage. DWDM boosts fibre optic capacity by carrying information through wavelengths along the light in each fibre.
The role of developing these important new technologies will fall on the shoulders of key vendors such as Cisco, Nortel, IBM and HP. But the conversion of these technologies into seamless working solutions will almost certainly remain the preserve of the reseller in the foreseeable future.
And this means that resellers will need to adapt. There has never been a more important time to abandon traditional approaches, take onboard new skills, develop new service models and application provision and embrace change.
- The past year has been a wash-out for networking technology and networking resellers, but considerable improvement is predicted for next year.
- Breakthroughs in wireless, storage and security technologies are leading the way to an exciting market for the future.
- The jury is still out on whether Cisco will be able to remain dominant in the future.
- Few resellers or vendors have made a move to address the market for converged data and voice solutions.
- Services provided by network resellers will need to change radically.
Case Study: Equinox Solutions
Managing the transition to a world of converged voice and data is easier said than done. One reseller that has already bridged that gap to help its future is Equinox Solutions.
Duncan Crook, managing director at the company, said: "In future, the carrier market will drive the enterprise market, which means that enterprise vendors and resellers will be forced into convergence. We have already made the jump with a move to what we call converged service provision (CSP). We believe that, in the future, you will have application sercice providers to provide the application, and CSPs to integrate everything."
CSP evolved out of Equinox's experience in managed and internet service provision, systems integration, process management and partnership management. It was conceived to fill what the company saw as a gap in the service provider market.
The model is based on an integrated collection of service provision, integration, technology and business process skills. It brings together seemingly disparate service provision skills, technical integration skills and the technological convergence of data, voice and video transmission. It also integrates new service provision solutions into traditional host and client-based environments.
This CSP-style integration, believes Crook, will be different from the technology-led integration services currently provided by many resellers. "For users, technology will be less important. Everyone will need to get back to business-led services. A challenge for corporate end users will be to ensure that their service providers and in-house IT people do not continue to get wrapped up in technology issues. The technology will be integrated into the business solution and that will need to be managed by someone like Equinox," he said.
Crook explained that old-style vendors will not continue to enjoy having things all their own way. "Cisco has been taking a battering for some time from new companies such as Juniper. Investors and customers are starting to see that Cisco has failed so far to win the carrier IP battle," he said.
"Contrasting the approach of Cisco and others is interesting. Where Juniper builds relationships with other vendors, ensuring overall seamless integration, Cisco continues to say: 'We have got everything you need right here'. Increasingly, they don't. Wireless, for example, is huge, and Cisco is not well placed in that respect," he added.
Other companies have also been eating into Cisco's dominance, according to Crook. "Nortel has been making great waves too, and Ericsson is winning important battles. Cisco certainly cannot keep buying to compete. It certainly cannot buy Juniper or Ericsson."
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