Thursday, 6 March 2003 8:30 am
In my 2001 book The Slingshot Syndrome, I wrote on page 93:

"As we embark on the 21st century, we are witnessing a disruption and transformation taking place in the telecommunications industry. This disruption is unlike any change the industry has faced since its inception in the 19th century. The resulting metamorphosis will be as significant as what the computer industry faced in the 1980's as the result of the PC and the Xerox PARC innovations. As before, the battleground is the North American market. This time, the incumbent leaders in the equipment segment, Nortel, Cisco and Lucent are behaving differently than their computer industry counterparts in the 1980's. The question is whether their different behavior will be sufficient to avoid a replay of the 1980's where new startups largely replaced the incumbent leaders in the computer industry."

Now, 18 months later, let's see if it is becoming clearer which way this question will be resolved.

In core routers segment, recent figures from the leading market research firms Infonetics, Synergy Research and Dell'Oro Group all agree that Juniper took seven points of market share away from Cisco last year for a total market share of 23%. Infonetics expects the telecommunications carrier router market to grow 19%-25% from 2004 to 2006, as capital expenditures are shifted by the regional Bell Operating companies (RBOCS) to more data gear. So in core routers, a 1996 startup - Juniper - is gaining rapidly on the leading incumbent, and doing so in a rapidly growing segment.

However, the big picture is still far from clear. In another segment scheduled for rapid growth, the embryonic voice-over-packet (voice-over-IP) segment, recent statistics show Lucent and Cisco increasing their market shares.  They now control a full 83% of the (admittedly microscopic) revenue between them.  Although a number of startups compete in this segment, as a group they appear to be losing market share to the traditional incumbent leaders.

So the question is still open. Stay tuned.