eWEEK: And Dell? Claflin: I think that Dell is really smart. Dell decided it could go in and suck out a nice piece of business at the very low end. Now everyone immediately said Dell wants to be an enterprise company. Kevin Rollins told Smith Barney that Dell had changed its strategy and wasnt going after being a tier one company, but has moved to tier two.I think Dell is a real competitor. Do I believe theyre going to be a tier one networking company with a broad enterprise product line? Absolutely not. eWEEK: How do you read the industry and the economy? Claflin: Ive come to the reluctant conclusion that I was wrong. When I became the CEO two years and four months agothat was right when the industry was going into the downturnI publicly said it was going to be a deep, long downturn, but that it was a traditional cycle and that it would emerge at the other end. I said it wasnt going to emerge like it was at the end of the 90s but like it was at the beginning of the 90s, when networking was growing at 10 to 12 percent, that was three to four times GNP growth. Im rethinking, and recently Im of the belief that for at least the next five to six years, the networking industry will be fundamentally altered. The main characteristics of the last decade or so are gone. Its more likely that industry growth will mirror GNP growth, maybe with an additional point or two on top. If the industry does better, thats great. But were planning for an environment where it grows a couple of points above the economy, period. That implies that the networking industry might only grow 4 to 6 percent. Any idea that we might be a high-growth company on the back of a good industry is gone. We have only one choice, and thats take market share. We learned we would not take market share going at the current course and speed.
Dell went out and hired a bunch of people from the networking industry, and they developed a business plan for Layer 3 switches sourced in Asia. Michael [Dell] put the kibosh on it and said, Were going to do plug and play, standardized, low end.