From Ma Bell to Wintel, the IT sector tends to be defined by its 800-pound gorillas-the massive companies that have positioned themselves to grab a share of the daily computing activities of most every organization and individual.
These are the companies that many of us love to hate. On one hand, tech’s largest vendors provide the market influence and financial muscle to translate nascent technologies and standards into the consumable, supportable products that enterprises require to carry out their business. On the other hand, the fiduciary obligations that these titans owe to their shareholders compel them to squeeze out as much revenue-and pursue as much product lock-in-as their customers will accept.
In this feature, eWEEK Labs considers five companies with enough size and product clout to bend the fabric of their industries, thereby shaping the products and services available to you, the standards by which these products abide and the viability of new competitors in a given market.
Of course, a company that weighs 800 pounds today may have been a lightweight just a few years ago. Conversely, companies that can currently throw their weight around may find themselves in a lighter weight class in the future. And, as you read this, there’s a company out there bulking up to fighting weight.
The Company You Cant Escape
In the good old days before the government tore Ma Bell apart via deregulation, AT&T reached directly into every house, business and pocket by providing telephone service for absolutely everyone.
After SBC Communications’ 2006 acquisition of BellSouth and the subsequent rebirth of the AT&T name and corporation, the company’s influence may seem to be regional. But it’s truly global-and more than a little scary.
On the plus side, AT&T continues to offer things that people want. For better Internet coverage on the go, AT&T’s takeover of the Starbucks Wi-Fi network looks appealing and affordable (at least for the coffee drinkers among us). And the company continues to grow its third-generation footprint, as HSDPA (High-Speed Downlink Packet Access) and HSUPA (High-Speed Uplink Packet Access) rollouts continue apace.
AT&T also has a very attractive stable of mobile devices, as the company seems more than willing to prostrate itself before hardware manufacturers (namely, Apple) to gain exclusive rights to distribute Internet devices that truly change the market.
If you’re a business customer, AT&T’s portfolio of innovative mobile services and applications-to go along with some groundbreaking billing alternatives-make the choice of mobile operator pretty simple.
Of course, trust is hard to come by-and probably harder to rebuild-and AT&T (and its SBC, BellSouth and PacBell forebears) has generated much ill will through the years with bad support, ridiculous service contracts and an overall penchant for being overbearing.
But even for those who choose to eschew AT&T’s residential, long-distance and VOIP (voice over IP) telephony service-as well as its DSL broadband and Advanced TV services, not to mention the entire mobile network-well, AT&T’s got its thumb on them, too.
Because AT&T is a Tier 1 service provider, it’s quite likely your online presence traverses the AT&T network frequently, even if you aren’t an actual AT&T customer. This means your data is susceptible to the company’s whims and machinations.
Cisco and Enterprise Networking
Want to e-mail that MP3 you bought from Amazon.com from work to home? You’d better encrypt it before it sets off AT&T’s forthcoming piracy filter.
Actually, you may want to rethink that encryption, as it makes it look like you have something to hide. AT&T has already been outed for funneling all its traffic into that secret National Security Agency monitoring station, and you don’t want the NSA thinking you have something to hide, do you? Better send that file via sneakernet, just in case.
And, of course, there’s always the good old anti-competitive practices that got the company declared a monopoly in the first place. AT&T is back at it, stifling broadband competition, as recent developments indicate the company will soon raise wholesale DSL prices significantly-leaving its independent ISP customers holding the bag as they lose money on existing customer contracts based on the old pricing structure.
All this leaves the impression that AT&T is more dominant and more scary than ever. It’s the company you love to hate-yet can never escape.
IOS is the lingua franca that all network engineers have at least some fluency in because of the dominance of one network equipment maker.
While many other networking companies have come and gone, Cisco Systems is widely recognized as the 800-pound gorilla of enterprise networking. Still up to weight and looking to the future, Cisco just unveiled the latest supervisor engine for its Catalyst 6500 chassis, which has the distinction of being the single-biggest-earning SKU in the company’s history. In addition, while plans call for active development of the Catalyst 6500 platform until 2012, Cisco recently rolled out the Nexus 7000, its new family of data center switching platforms.
Cisco wasn’t always the dominant force in networking. Through much of the early ’90s, Cisco was often confused with the food service company Sysco. But with growing acceptance of IP networking and a string of acquisitions that grew company revenues and product capabilities, Cisco has become a behemoth with almost household name recognition.
The company’s dominance affects how network managers and even the entire IT industry work. Much as a carpenter solves problems with a hammer, Cisco’s IP prowess tends to mean that every IT challenge appears to have an IP network solution. For example, primarily because of Cisco, endpoint security is thought of as a problem to be solved in the network with admission control protocols, instead of an operating system problem to be solved with various trusted computing initiatives.
This becomes even clearer when you look at the company’s emerging technology group.
Cisco is betting its future on moving more data onto IP-based networks. Aside from widely heralding the convergence of voice, data and video on the network, the company is focused on TelePresence, IPICS (IP Interoperability and Collaboration System), physical security, and digital media and signage. Tele-Presence is basically videoconferencing on a “Star Trek”-like scale of realism, while IPICS involves emergency communication systems.
Cisco CEO John Chambers said in 2005 that the company would take greater risks in developing emerging technology to ensure continued growth. In addition to the emerging technology areas mentioned above, several other technologies are in the Cisco incubator, company executives have told eWEEK.
Is Google Evil?
Unlike some of the other gorillas named in this story, Cisco faces serious challengers on a number of fronts.
Alcatel-Lucent, Nortel Networks, Hewlett-Packard, Dell, Juniper Networks and Extreme Networks offer alternatives to Cisco products for enterprise-class networking infrastructure, and Blade Network Technologies (formerly a Nortel division) makes integrated blade server switches that compete with Cisco switches. On the application acceleration front, Riverbed Technology, Radware, Packeteer and Juniper all offer compelling alternatives to Cisco offerings, and Brocade Communications Systems goes toe-to-toe with Cisco on storage networks.
But all that being said, Cisco is still king of the networking jungle-at least for now.
“Don’t be evil” is supposedly a motto adopted early on by Google. But while that slogan may apply to some of Google’s business practices, there’s nothing scarier or more evil than Google to businesses that find themselves in competition with the search giant.
And when we say businesses in competition with Google, we don’t just mean search vendors. Increasingly, any company that makes a living off the Web runs the risk of finding itself in competition with Google.
In recent years, Google has spread its reach across many areas of the Web. From e-mail to hosted applications to online selling, Google has moved in and quickly changed the dynamic of every market category it’s chosen to play in.
Even worse, from the standpoint of competitors, is how Google moves into a new technology area: When Google launches a new technology, it invariably offers it for free. So not only is your business now competing with one of the most powerful companies on the planet, but the price you can charge for your core product has dropped to essentially zero.
Even if your business doesn’t compete directly with Google, the company is a core piece of your overall business strategy if you do business on the Web. Need people to find your products and sites? Then you need to optimize for Google search. Are you making money from Web advertising? There’s a good chance you’re using Google.
Google’s pervasiveness could spread to how people access the Internet and the Web. With a successful bid in the Federal Communications Commission’s spectrum auction, Google could become a primary provider of broadband Internet access. And, yep, there’s a good chance Google would provide such access for free.
Google’s influence doesn’t look to be waning any time soon. If anything, it is only growing, as seemingly every month or so sees a major new release or initiative. For example, many Web-based collaboration vendors probably felt a chill from the recent release of Google Sites.
Where will Google’s influence over the Web stop? Right now, no one knows. But if things continue at the current pace, when people say they are Googling, they won’t mean just searching-they’ll mean doing anything on the Web. (Oops, I mean the GoogleWeb.)
Crack open your desktop PC case, peer into your notebook computer or peel back the cover from one of your workhorse servers, and chances are excellent you’ll find Intel Inside. The Silicon Valley chip maker, founded in 1968 by Bob Noyce and Gordon Moore, designs and builds the processors-and, to a growing extent, the graphics and network adapters-that power our computers.
Intel controls upward of 75 percent of the market share for the ubiquitous x86 processor. And, considering the company’s strong relationships with server and PC OEMs, its broadly recognizable brand and, perhaps most important, the high cost of entry for potential new microprocessor rivals, Intel’s status as an 800-pound gorilla of technology appears awfully secure.
IT managers feel the pull of Intel’s industry gravity primarily in the form of products available for purchase, particularly high-volume products such as PCs and workhorse server hardware. Intel’s massive size, relative to its rivals’, means that even if upstart x86 competitors-such as the once-promising Transmeta-manage to capture buyers’ attention, these competitors are unlikely to deliver their chips in the sort of volume required to challenge Intel effectively.
Microsoft Still Owns the Desktop
What’s more, as a recently revealed e-mail thread pertaining to Microsoft’s Windows Vista Capable debacle indicates, Intel wields significant clout with its partners. According to the e-mail thread, Microsoft adjusted its Vista labeling requirements to allow systems based on Intel’s 915 chip set to be labeled as capable of running Vista, even though these systems cannot handle Vista’s hardware-accelerated interface.
Intel’s most formidable direct rival is Advanced Micro Devices. AMD made a successful play at expanding its market reach beyond enthusiast processors by outmaneuvering Intel with a 64-bit chip strategy based on extending the x86 instruction set, rather than by creating a wholly new 64-bit architecture, as Intel did with its poorly received Itanium processor.
In a reversal of the two companies’ typical leader-follower roles-and a demonstration of its strength-Intel quickly rebounded by releasing its own implementation of AMD’s 64-bit x86 extensions in the form of the Intel EM64T (Extended Memory 64 Technology) architecture. AMD may not be large enough to topple Intel’s x86 dominance, but the existence of a solid competitor to Intel has helped spur innovations such as hardware-assisted virtualization extensions and multicore processor advances, while keeping Intel honest with its pricing.
Moving forward, Intel’s most challenging competition may come from the world of mobile computing, where smart phones and so-called mobile Internet devices, such as Apple’s iPhone and Nokia’s N800 Internet Tablet, have matured enough to begin vying with traditional “fat” notebook PCs.
In the mobile realm, processors based on ARM’s Advanced RISC Machine architecture currently rule the landscape. In 2006, Intel divested itself of its own ARM-based product line, and Intel recently announced a new line of x86-compatible chips for mobile devices to be marketed under the brand name Atom.
Intel is betting that x86 compatibility will prove as valuable in the mobile device space as it has in the 64-bit processor market. And, if the chip giant turns out to have wagered poorly, it has demonstrated it has the heft to change course once again.
As of January, the Windows operating system had 91 percent of market share, according to the Net Applications Web site. Meanwhile, Microsoft’s dominance in the office productivity sector is estimated at 90 percent. In other words, Microsoft owns the desktop.
The company’s formula for success is equal parts brilliant business strategy and ruthless strong-arming.
Microsoft makes the platform on which desktop applications are run, giving Windows apps an architectural advantage over other desktop software. In addition, the company offers the tools with which many Windows applications are developed, asserting influence from the ground up.
Case in point: Microsoft sparred with Sun Microsystems in the ’90s over Microsoft’s implementation of the Java programming language. Through its development tools, Microsoft made it easy and attractive to develop Java applications that relied on Windows-specific components. The strategy effectively short-circuited Sun’s Write Once, Run Anywhere promises for Java with Windows-only applications.
Microsoft’s role as producer of the platform on which nearly all desktop applications run also enables the software maker to distribute applications in a way that’s not possible for third-party developers. For instance, Windows Media Player ships with every copy of Windows. RealNetworks’ RealPlayer, on the other hand, does not.
Microsoft is so big on the desktop that application developers must target Windows before they attempt to target other operating systems. New hardware standards can’t take off until they become part of Windows, and hardware OEMs must sell Windows-based systems because the operating system is the de facto standard. As long as running Windows applications is a requirement for a general-purpose computer, computer makers-which deal with very thin margins-can barely afford to offer alternatives.
Microsoft has amassed more than 5,000 patents to date, and the company’s officials have made a practice of rattling its patent sabers at its rivals, particularly those in the open-source community.
Free open-source office suites such as StarOffice, OpenOffice.org and Zoho haven’t begun to pull Microsoft off its pedestal yet. However, Web-based applications needn’t rely on a particular operating system, and they can be accessed from many different devices. As these services grow in maturity and popularity, they could potentially level the application playing field enough to allow a combination of alternative platforms to loosen Microsoft’s desktop grasp.