The Riverbed Blog (testing)

A blog in search of a tagline

John Chambers finally admits: Cisco WAAS losing market share

Posted by riverbedtest on November 15, 2010

"To the two areas, ANS and [WAAS] that you said here are some areas that we have some good competitors…we did lose market share in those two categories."

John Chambers, Analyst conference call November 10, 2010

As many are aware by now, last week Cisco issued a rather disappointing earnings report for the past quarter.  And during the teleconference to discuss those results, John Chambers' main objective was to reassure investors that Cisco was not losing market share in the product categories that matter.  Mr. Chambers claimed that Cisco is doing great almost everywhere–for example, routing products grew 13% year-over-year, and switching products grew 25% year-over-year.  It was only these two smaller areas–application networking where Cisco competes with F5, and WAAS where Cisco competes with Riverbed–where Cisco was losing significant market share…

The Cisco CEO does have a valid point that these two markets where Cisco is losing share are relatively small in comparison to Cisco's other markets.  But the counterpoint here is that they also happen to be the fastest growing markets where Cisco is engaged.  When viewed from that perspective, news that Cisco is losing share in "only" these two markets certainly is not good news.

Although Mr. Chambers' admission was intended for Cisco investors, nevertheless there may also be something that Cisco customers can deduce from his statement.  Cisco's WAAS business unit claims that WAAS is the same as Riverbed–only cheaper.  They also claim to have success in large enterprise deployments, and that they have numerous "happy" WAAS customers.  But if these claims are true, then wouldn't it be more natural to see Cisco continue to gain market share?  How will the WAAS business unit reconcile their claims with the recent statements of their boss, Mr. Chambers? 

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7 Responses to “John Chambers finally admits: Cisco WAAS losing market share”

  1. Larry Chaffin said

    I think it will be interesting to see how Cisco Marketing or the WAAS Product Marketing Manager puts a spin on these comments. We all know Cisco is cheaper, how can it not be cheaper when every Cisco customer gets 42-55% off list cost. That just says Cisco has really inflated list cost so the huge discounts look good to the customers.
    Maybe if Cisco spent money to acquire more companies to bolster the WAAS product they could gain market share, but it will never happen. Cisco just likes to buy companies, put the Cisco name on the product so they can say they have a product in that space. Then they say it is the best product in the market. Which is far from the truth and people are finding out with the WAAS.
    Cisco should have put money toward the WAAS and not handheld video recorders, maybe then they could compete with others in this space.
    I see Cisco taking a huge drop in market share reports like Blue Coat did over the last year.

  2. Ashton said

    Cisco should look to buy the only private WAN Opp company left out there, Expand Networks, if Riverbed was keen for them in 2009 then there must be something to it, not so.

  3. Ashton said

    Cisco should look to buy the only private WAN Opp company left out there, Expand Networks, if Riverbed was keen for them in 2009 then there must be something to it, not so.

  4. Surfer Guy said

    Could it be that the large customers Cisco sells it’s WAAS to haven’t been purchasing this last Q?
    Why is it that the quote from Chambers says “we did lose market share in those two areas”
    Yet Riverbed added the “significant” word into there when describing the read they took on the article.
    Interesting marketing guys.

  5. Josh Tseng said

    >>>Could it be that the large customers Cisco sells it’s WAAS to haven’t been purchasing this last Q?<<<
    Surfer Guy, that's quite a profound statement. For once I think I agree with you. While Cisco's large customers continue to buy their routers and switches (13% and 25% growth respectively), they have stopped buying WAAS. Why do you think that is?
    Josh

  6. Surfer Guy said

    I noticed you skipped the part where you added wording into Chambers’ comments. Nice.

  7. annon said

    Why would anyone want to buy Expand Networks? That company is dead. Using 32bit technology with the same code base from 2005. Addon a few parts. Squid disksites and you have a bloated buggy product that continues to lose market share on a nearly daily basis. I did not even know they were still in business actually

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