Cisco System's Control Over The Computer Networking Market And The History Of Their Development.

1963 words - 8 pages

The largest technology company in the world won't touch your desktop computer. The largest computer company in the world--or at least, the most valuable--is no longer Microsoft. Last March, Microsoft temporarily surrendered that position, due to shifting stock prices, to another: Cisco Systems, which doesn't have any products you are likely to install on your desktop computer soon. Since then, Microsoft's stock has tumbled hard, and Cisco has solidified its leadership position even as its own stock has recently retreated a bit (along with that of most technology companies). So, in the sense that the 26 percent drop in Microsoft's stock price over the past four months is due largely to the antitrust findings against the company, the Department of Justice has, in a way, already fulfilled its mission: they have cut Microsoft down to a size in which it no longer thoroughly dominates the computer industry.But if you feel any relief from that statistical adjustment, your next question might be about the new numero uno. When did Cisco sneak up there? The San Jose, Calif.-based router company is far less visible than the Redmond software maker: The name Cisco does not appear on most PC screens when they load their operating system, it isn't incorporated into the name of the leading word-processing and spreadsheet and graphics applications, and it doesn't have multimedia product-launch events hosted by Jay Leno. But if you ever connect to the Internet, you are a user of Cisco products. Some estimates give Cisco as high as 85 percent of the network router market, which is ultra-critical to computer operations within large corporations, as well as to Internet function. The runner-up, Lucent, has only a 5 percent share.Cisco has some other habits that you might expect to raise the eyebrows of the antitrust hunters in Washington. It has proprietary code that competitors must be compatible with in order to compete. Cisco frequently buys small companies that have developed new technology, and incorporates it into their own products. (Since John Chambers took over as CEO six years ago, the company has acquired more than 60 networking equipment and software companies). And in the past year, three of its largest competitors have decided to quit selling network routers that compete with Cisco's.Why cisco dominatesEvery dominant high-tech company seems to have a mythos--usually one of questionable origin. The myth of Microsoft is that Bill Gates and Paul Allen wrote DOS, the first ultra-popular PC operating system, in a garage. The myth about Cisco is that Sandra Lerner and Len Boseck, Stanford University staff in different academic departments, wanted to exchange romantic e-mail, but each department used totally different network systems--so they invented the network router to solve their problem.Reality, sadly, tends to lag behind myth in terms of dramatic potential. Gates and Allen actually purchased most of the DOS code from a Seattle developer and repackaged it...

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