The leading suppliers in the next-generation networking market will not be today's giants such as Lucent and Cisco, but startups that provide multi-purpose products.
Paul Johnson, senior analyst at investment company Bancboston Robertson Stephens, said the dominant players in the future, including terabit router specialist Juniper Networks and digital subscriber line technologist Redback Networks, will have designed flexible products that meet the demands of networking requirements.
This is in direct contrast to suppliers such as Lucent and Cisco that are pushing end-to-end portfolios of products that are too specialised, Johnson claimed at the investment bank's Investing in Innovations conference held recently in San Francisco.
"The candidates to be the next industry gorillas have to have products that look like a platform, even though they may solve specific problems.
Customers' problems change, so it will be unwise to have single-point products. Having a platform gives you flexibility," Johnson said. He pointed put that neither Lucent nor Cisco were moving towards this scenario.
However, Johnson was also pessimistic about the future of independents that are being swallowed up by today's giants.
"Big companies focus on too many things, worry about cannibalisation and have political issues. Mergers and acquisitions don't work very well - the execution of the company does not improve once it is bought. In fact, execution peaks the day before it's acquired," he stated.
As a result, Johnson advised networking startups to remain independent and use funds from IPOs to help with expansion plans, rather than be acquired by larger companies.
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