The leading suppliers in the next generation networking market will not be today's giants such as Lucent and Cisco, but start-ups that provide multipurpose products.
According to Paul Johnson, a senior analyst with investment company, Bancboston Robertson Stephens, the new players, including terabit router specialist, Juniper Networks, and digital subscriber line technologist, Redback Networks, have designed flexible products that can meet the ever changing needs of the new networking era.
This is in contrast to suppliers such as Lucent and Cisco that are pushing end to end portfolios of products, which are too specialised, he claimed at the investment bank’s “Investing in Innovations” conference in San Francisco this week.
"The candidates to be the next gorillas have to have products that look like a platform, although they may solve specific problems. Customers' problems change, so it's a problem to have single point products. Having a platform gives you flexibility," he explained, adding that Lucent and Cisco "don’t get this."
Suppliers of such offerings should also that ensure that their equipment is well integrated, so they can offer end to end solutions as well, Johnson continued.
But he was also pessimistic about the future of independents that are 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 gets bought. In fact, execution peaks the day before it’s acquired," he attested.
As a result, he advised networking start-ups to remain independent and use funds from initial public offerings to help with expansion plans rather than be acquired.
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