When StubHub executive Robert Capps oversaw the building of a new data center, he shunned Cisco Systems Inc., the company's ...
When StubHub executive Robert Capps oversaw the building of a new data center, he shunned Cisco Systems, the company’s regular provider of networking equipment, opting instead for gear from smaller competitors.
Capps estimates that the online ticket seller spent about half the money it would have if it had used Cisco products and that it got equipment better suited to its data centers, the massive rooms of computers that run websites.
Cisco responded to Capps’ decision by calling his boss and questioning his competence as a technology manager, he said.
“Cisco wasn’t serving our needs,” Capps said. “They were not innovating in the areas of data-center operations that we needed innovation. The way they go about their sales process is through pressure and intimidation.”
- Seattle fifth-graders will get their camp trip, but teachers refuse to go
- Designed in Seattle, this $1 cup could save millions of babies
- Five things to watch as Seahawks begin OTAs Monday
- Ivar’s looks to sell, lease back two venerable restaurant sites
- What the national media are saying about Robinson Cano and the Mariners' hot start to the season
Most Read Stories
The incident underscores the challenges facing Cisco Chief Executive Officer John Chambers, who is leading a turnaround effort at the world’s largest networking-equipment maker.
Rivals such as Juniper Networks and Hewlett-Packard are undercutting Cisco on price and pitching products designed to be simpler. Information-technology managers also have been put off by Cisco’s response to losing them as customers.
John McCool, a senior vice president at San Jose, Calif.-based Cisco, declined to discuss specific customer examples or whether it has called the bosses of technology managers.
The company is leading efforts to create simpler networking standards for data centers and its market share has remained “relatively stable” in recent years, he said.
Even so, some customers say Cisco’s rivals are providing them with simpler solutions to their networking challenges.
Take Ken Widner, an information-technology director at Interstate Battery System International. He chose Juniper to help him rebuild the company’s data center in Dallas in 2008, and again last year when rolling out new software to track sales.
“Juniper was out here all the time, taking us back to their lab, setting things up and letting us try them out,” said Widner, who estimates that 30 percent of the company’s networking gear today is from Cisco vs. 100 percent a few years ago. “It really felt like a partnership.”
Cisco also called Widner’s boss after Juniper was chosen, he said. Cisco claimed he was jeopardizing Interstate Battery’s infrastructure, Widner said.
Cisco’s McCool said his company seeks to listen, learn and forge partnerships with its customers.
“Much of Cisco’s innovation has resulted from listening to customer needs,” he said in an email. “If you think about the size of our installed base, we essentially have the largest networking focus group in the world for understanding future customer needs and innovating future solutions for them.”
Some customers still praise Cisco’s products. Bart Falzarano, chief information-security officer at Walz Group in Temecula, Calif., bought some switches from a competitor two years ago to save money. The switches slowed down the network and caused problems before Falzarano realized the sales team had advised buying the wrong products.
Frustrated, Falzarano returned to Cisco. Walz Group hasn’t had hardware failures since — a necessity for a company that manages documents for government agencies and financial and health-care companies, he said.
Still, research firm IDC shows Cisco’s market share slipping in routers and switches — the two main types of networking equipment. In the past five years, Cisco’s portion of router sales has dropped to 55 percent from 66 percent, and its share in switches has fallen 2 percentage points to 67 percent, Framingham, Mass.-based IDC found.
Cisco earnings reports have disappointed investors five quarters in a row, sending its stock into a slump. The shares have fallen 20 percent this year, following a 16 percent drop in 2010.
For years, Cisco has benefited from the impression that its products are a safe bet, said StubHub’s Capps, who switched to gear from Arista Networks, Xsigo Systems and Mellanox Technologies to outfit his data center.
He cites a commonly heard phrase: “No one ever got fired for buying Cisco,” a twist on a saying applied to IBM.
Like IBM, Cisco pioneered several technology markets, only to see smaller rivals chip away at its dominance.
“Cisco has moved from a position where everybody in the IT industry looked to Cisco for support to now everybody in the industry doesn’t want them anymore,” said Mark Fabbi, an analyst at Gartner.
In his research, he found companies save money and decrease complexity working with multiple networking suppliers.
“It’s a tough job now all of a sudden. Enterprises are willing to look to alternative technologies and vendors,” Fabbi said.
Data-center growth also has drawn competition from Hewlett- Packard. It aims to be more of a one-stop shop for cloud-computing products, which deliver information and software over the Internet.
“The networking market has lacked competition for at least a decade,” said David Donatelli, who oversees HP’s enterprise servers, storage and networking business.
HP charges 35 to 40 percent less than Cisco for “major switching products” and has won market share in switching and wireless local-area networks, Hewlett-Packard said.
In addition to discounting, HP has been telling customers that its networking gear is less complicated than Cisco’s and giving 20 percent discounts to companies that replace Cisco gear with HPs. This has helped win over companies such as DreamWorks Animation and G&J Pepsi-Cola Bottlers, HP said.
Matthew Mackes, a network administrator at Delta Sonic Car Wash Systems in Buffalo, N.Y., is another former Cisco customer. He ripped out Cisco boxes from his company’s network two years ago, when he was redesigning the system to better connect the hones, security cameras and plasma TVs displaying ads in Delta Sonic’s carwashes and gas stations.
Mackes stacked the Cisco switches on a table and asked his colleagues if there was any reason to keep the gear. No one spoke up, he said. He estimates he saved $500,000 using technology from Vyatta and other suppliers instead.
“At a certain point, it becomes obsolete,” Mackes said.