- Cisco has ruled the network equipment market for decades but it has challengers.
- Analysts say Cisco is losing market share to a new crop of network tech acquired by competitors.
- Cisco’s grip could be weakening in the switching, server and wireless markets, analysts warn.
Cisco has had an iron grip on the computer networking equipment market for corporations for decades. But a crop of new network technologies owned by its competitors is starting to chip away at its dominance, analysts tell Insider.
“The competition is eating away at them from every angle,” Jim Fish, director and senior research analyst at Piper Sandler, told Insider. “But that’s what you get for being one of the big boys on the block.”
While Cisco has been pushing beyond its core business of network routers and switches, the bulk of its revenue continues to come from networking infrastructure. Of the $13.3 billion in quarterly revenue that the company reported last week, $7.55 billion came from infrastructure sales.
While it is still the biggest player in the campus switch market, over the past three years Cisco has lost market share, falling from a commanding two-thirds of the market to now controlling just over half, according to a report by Sameh Boujelbene, senior research director at Dell’Oro Group.
The biggest threats to Cisco’s switch dominance are Arista Networks, Hewlett-Packard Enterprise, Juniper, and Extreme, according to Boujelbene’s report, all of which have been competing with Cisco for years.
Those vendors have all recently bought emerging switch startups that is helping to bolster their positions — Arista acquired Mojo Networks, HPE bought Silver Peak, Juniper acquired Mist Systems, and Extreme took over Impanema, formerly the SD-WAN division of Infovista.
Juniper, Extreme, and Arista are also challenging Cisco’s software that companies use to manage networking infrastructure and building competitors to Cisco’s cloud-managed wireless networking platform Meraki, according to Needham senior analyst Alex Henderson.
“Meraki is incredibly vulnerable,” Henderson told Insider. “This arms race is happening and the competitors are undermining the company.”
Cisco’s market share also appears to be slipping in another key area of its infrastructure business: data center hardware, or servers. The company’s data center revenue declined to $2.57 billion for the last fiscal year ending in July, down from $3.16 billion the year prior.
In a call with investors last week, Cisco CEO Chuck Robbins attributed that decline to “market contraction.” The rise of cloud computing has meant fewer companies are buying their own servers and are instead renting servers from cloud giants like Amazon Web Services or Microsoft Azure.
But there’s reason to believe Cisco is losing market share to other server makers like Dell and HP, too, according to William Blair analyst Jason Ader.
“They’ve been losing share over the past several years. That’s really the only explanation,” Ader told Insider. “For them to say contraction of the industry, that’s a very one-dimensional explanation.”
Still, Cisco’s VP of product for enterprise networking and cloud Greg Dorai told Insider that the company is “more confident than ever” in its switching portfolio and software platforms, especially as companies rethink just how much cloud computing they will use.
“Strong competition is the inevitable outcome of dynamic markets,” Dorai said. “As our customers double down on digitization and embrace hybrid work, they tell us networks that can secure, automate, and connect their business has never been more critical.”
Do you work at Cisco? Got a tip? Contact this reporter securely via email at email@example.com or via the encrypted-messaging app Signal at 706-347-1880 using a nonwork phone.