15 May 2009

Intense competition in the Local Area Network (LAN) market segment

The intense competition in the LAN (Local Area Network) market segment that began with such intensity in the spring of 2008 continues in the second quarter of 2009.

Seven manufacturers have already drawn even with Cisco regarding the relevant features that corporate customers want. This gives buyers plenty of room to negotiate. State-of-the-art specifications are a must.

The market experienced never before seen discounts and Nortel was the first victim that had to go into Chapter 11. The price war is in full swing, Cisco's efforts to stabilize unit prices often ended in lost tenders or customers.

Cisco's attempt to escape pricing pressures through new features could be countered by competitors accelerating feature delivery. Customers have never had it so good. Lower power consumption, less noise and smaller specific switches, powerful management capabilities, and more are now available from several manufacturers.

Cisco has also lost its pioneering advantage in security. The network market has changed since 2008. Now there is strong competition. The market changed from a supplier market to a customer market. Which manufacturers will listen and which will follow Nortel into Chapter 11?

But the customer must also carefully prepare a tender, which requires a lot of know-how, in order not to restrict competition by being sold on "nice to have features".
Missing requirements also make it difficult to compare offers.
In view of increased compliance requirements and the supplier's more frequent use of legal means to combat the increased competition, creating tender documents is more demanding than ever. An IT staff member writes the same specification an average of one maybe two times during their working life. The know-how must come from the outside!