We’ve surveyed buyers since 1982 for enterprises and 1991 for network operators, both to find out what they’re planning to do and to find out what they think of vendors. I’ve been sharing some of the findings on plans and attitudes, and this seems a good time to share some on vendor influence. You’ll see why as we go along.
Who’s the top player in tech, influence-wise? That question would have been easy to answer at any point in the last 30 years—IBM. It’s not so easy today, because another player has gained ground and IBM has lost it. In the fall, Cisco and IBM were in a dead heat for overall influence on tech buyers. Cisco’s aspirations to be the number one IT company are coming to realization, if influence is a measure of future ability to drive purchases.
But just as interesting is the fact that Cisco is gaining by losing. Or at least losing less. The fact is that since 2010 vendors have lost influence with their customers. Cisco has lost less than rival IBM, less than HP or Juniper. They’re losing a race to the bottom, which puts them nearer the top.
What buyers say is causing the decline in vendor influence is a factor I’ve already blogged on. They believe that vendors are simply pushing boxes at them without regard for whether the buyer can make a business case. In the service provider space especially, vendors are seen as not supporting buyer business transitions. Cisco gained ground on rivals not so much because they did better at this transition support but because they introduced UCS. If you look at past trends, Cisco would be in trouble in terms of account control if they hadn’t added servers to their portfolio. The data now suggests that Cisco’s next big push had better be in software; buyers think Cisco will sink by 2016 without a stronger software strategy.
If you look at the losers in influence, you see some common threads. One is scope helps. Companies with broader product lines generally exercised more influence than those with narrow product lines. That’s not surprising, I think; if you can talk to a buyer about everything they need you’ll talk to them more often and have more shots at gaining traction. Another factor is marketing/positioning. Vendors like Cisco who are seen as marketing machines tend to do better than vendors like Juniper who are seen as being inept in positioning their offerings.
IBM may be the biggest poster child for the value of marketing. Buyers in both the enterprise and provider space say that IBM’s website and public positioning is muddy and confused and uninspiring. Big Blue does well face to face, but the problem is that there are only so many major accounts that can justify a full-court press sales-wise. As IBM has come to depend more on SMBs for revenue and profit and on channel sales for engagement, they become more dependent on marketing to get their message out. It’s not working, as my numbers have shown.
Buyers also don’t like management shifts and confusion. HP leads the parade in terms of loss of influence and every down-tick corresponds to a new management foible. An average buyer expects 4.8 years of useful life from a piece of tech gear, and if you don’t know what your seller is going to be doing a week from now there’s certainly grounds for concern. That raises questions for companies like Alcatel-Lucent, IBM, HP, NSN, and now Juniper who have recently made key management changes and/or ownership changes.
So what can we say about what vendors should do next? For IBM and HP and Juniper, it seems clear that what they need more than anything else is better positioning and marketing. None of these companies score well with buyers on the critical measure of “does the company fully exploit its own technology and benefits?” IBM and Juniper have been sliding in this metric for quite a while and so a reversal is critically important for them. If they don’t reverse their trend line it’s almost certain that Cisco will take over as the most influential player.
Juniper’s big chance comes at the end of this month when their new CEO takes over. An encouraging sign IMHO is that software head Bob Muglia has announced his departure, following his CEO mentor Kevin Johnson out of Juniper. I think that this pair took Juniper in a decisively wrong direction. What I don’t know is whether new management will do any better. If Juniper presses Cisco hard on effective innovation in networking they’ll erode Cisco’s influence and give IBM a chance. Juniper could be a spoiler, and that of course could have a major impact on Juniper’s sales and profits.
For the giant telco vendors like Alcatel-Lucent, Ericsson, and NSN, things are complicated. Full-spectrum network product lines have made it almost impossible for any of these companies to weather changes because everything is a zero-sum game when you support the new and old technologies at the same time. Ericsson has been levering professional services and OSS/BSS, which is smart, but they are not innovators by nature and they are at serious risk as technologies like SDN and NFV mature. They’ll demand innovation, and that’s where Alcatel-Lucent and NSN can catch up. I see both these Ericsson competitors trying to hew out a position in SDN and NFV. Nothing imaginative yet, but it could happen. And, of course, Huawei is in the wings waiting for the opportunity to simply price them all out of the market. Stand still and Huawei will sell your niche out from under you.
So that’s a summary of where we are (subscribers to our journal Netwatcher will get a full report later this month). A lot could happen next year, but we’ve had fairly stagnant and unimaginative productization in networking for a while now. We have to shake off the cobwebs or the trends of the past will fossilize into the pebbles of the future.