Jan 20th, 2009
Diversification or Focus
There is a simple and classic strategy to maximize the chances of winning: spread the opponent’s resources wide and pierce his weak point with concentration of your strength.
Why would Cisco start a server business? I guess that someone in Cisco found out that routers are really the same, from manufacturing’s and engineering’s points of view, as servers. If they make good routers, they should be able to make reasonable servers too.
But server and router businesses are quite different. The components of servers are mostly commodity these days. To differentiate, Dell claims the cost leadership, IBM and HP built armies of service personnel and a vast array of system software. Sun has Java and Solaris.
It will take years and billions of dollars for Cisco to build up this business and compete with IBM, HP, and Dell. All of them very good at raging attrition wars against smaller players. It does not make Kevin Johnson happier when John Chamber make enemies with Mark Hurd, Samuel Palmisano, and Michael Dell at the same time.
Cisco did not announce a sofware strategy, they simply mentioned vmware. The implication is that OS is up to the customer and run on top of the virtualization layer. We all knew that Cisco is not very good at producing a strong operating system (most of the variations of IOS are not full-feature OS). This seems like a good spot for Juniper to poke.
2009 should be a good year for Juniper.