A battle is brewing between Microsoft and the network hardware vendors, primarily Cisco, over which will control the key technologies and therefore the market for network intelligence products.
Microsoft views network hardware suppliers as being similar to Unix vendors, which base their business on monolithic, largely proprietary systems. As a result, it sees the sector as a prime target to sell its ?good enough?, high volume, low margin Windows NT based servers into.
Neil MacDonald, a Gartner Group analyst, explained at the market research firm?s ?NT in the Enterprise? conference in Palm Springs on Tuesday, that Microsoft and Cisco were currently squaring up to try and gain control of interoperability standards for the intelligent network infrastructures that will be necessary to manage end to end connectivity in the enterprise.
?Microsoft?s foray into the networking arena is having an impact on established vendors and a battle is brewing over network intelligence. Microsoft wants to provide intelligence in the network infrastructure by putting it into the server, but Cisco wants it in its routers and switches, so there?s growing tension between them,? he said.
As a result, Microsoft has spent $2 billion over the last two years investing in networking companies with technology that it can integrate into NT.
It sees the intelligent network of tomorrow based on an ubiquitous Active Directory infrastructure that is hosted on pervasive NT Servers. This would mean network hardware was relegated to handling only those processes that require very high transfer speeds.
The network vendors, on the other hand, are coming out with their own software based network service strategies to try and optimise the network infrastructure. The aim is to have these services provide intelligence to the basic plumbing and to make such services so compelling to enterprises that ISVs want to build applications based around them.
MacDonald concluded, however: ?Cisco will ultimately be forced to use some Embedded NT in its products, which will hit margins due to the royalties it will have to pay Microsoft. At 65 per cent, these are currently higher than Microsoft?s, but by 2003, at least 10 per cent of its revenues will come from NT based products. This will reduce the vendor?s gross margins to about 40 per cent.?
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