The networking industry started in late 1970’s with the widespread use of IBM proprietary computer architectures which used “dumb” terminals connected to the mainframe computer. As the trend towards the “distributed processing increased, the companies felt a strong need to integrate their desktop so that information can be shared. Further, the movement towards open standards in data processing and transmission gave impetus to the industry. As industry became more mature, the equipment providers which formed the core of the industry focused on two areas:1. Increasing the efficiency of transmission through packaging data within various protocols.2.
Compression technologies and increasing absolute bandwidth which increases the amount of data, or the size of the data packet that can be transmitted in a given amount of time.Network Components:A typical data network consists of the following products:Network Interface Card (NIC): Usually installed on desk top PCs allowing these PCs to send and receive data across corporate networks.Hub: Central collection point for a corporate network which breaks up and recombines data signals from individual desktop machines for efficient transmission.Switch: directs traffic between corporate hubs as well as to outside links through the router.
Router: usually the core of the corporate network: it sends packets of data between far flung corporate sites as well as outside connections via the internetFrame Relay and Asynchronous transfer mode (ATM) Switch: Recently develop types of switches that direct data traffic across network while effectively enhancing bandwidth and transmission speed.Remote Access Device: Handles data to/from remote or mobile sites typically over common telephones lines, using modem technology.Modem: Most often found in homes or remote desktops; allows users access to networks through a common telephone line.
Firewall Software: Monitors data flow and prevents unauthorized access to enterprise networks.Role of Standards in Telecommunications and Network IndustryStandards and their development provide stability and tend to lower costs. The standards played an important role in reducing uncertainty among users and stiffer price competition among manufacturers. The different stakeholders in the industry demand that product manufacturers develop products that adhere to openly published standards. This allows both enterprises and individual consumers more options in putting products together without being “locked in” with one particular manufacturer. Standardization is beneficial to the production of the content as in the delivery process itself.
An example of standard in the router technology is as follows: The IP Multicast protocol is a standard extension to the IP protocol. The IETF-recommended standard, RFC 1112, defines extensions to the IP protocol. This standard specifies the extensions required of a host implementation of the Internet Protocol (IP) to support multicasting. It also specifies the format, addressing and routing of messages on the Internet. IP Multicast allows a sender to send a single message to a group address. Any receiver that joins the network under this group address receives the message.
The replication and forwarding of the message to the appropriate receivers is handled intelligently by routers within the network. All major router vendors support IP Multicast.The current consensus is that due to the wide variety of multicast application requirements–some of which are at odds–no single multicast transport will likely be appropriate for all applications. As a result, most believe that we will eventually standardize a number of reliable multicast protocols, rather than a single one.Adding Value through Telecommunications Network Technology:Lower Costs through Capital Equipment Savings: Enable higher disk utilization, extending storage life and postponing new storage router purchases. With the flexibility to share storage resources as a pool, administrators can use previously wasted excess capacity on underutilized devices.
Networked resources allows for backup strategies requiring less hardware. For example, where each server may have previously required its own tape drive for backup, networking resources can now help share tape libraries that reduce the amount of total enterprise equipment & expenditure required.External NAS: Network Automated Storage extends server life by providing room for applications to grow. Being able to accommodate larger storage capacities and data sets lengthens the usable life of a server and reduces purchasing cost.Lower Operating Costs through Storage Management Savings: Since personnel costs comprise such a large portion of the ongoing IT budget, reducing intangible costs such as storage management trims operating costs significantly.
With networked storage, centralized management eliminates the need for multiple software packages, facilities easier maintenance, and allows each administrator to manage more data.Reduced Downtime through Availability and Protection: This covers the primary defensive strategies including clustered configurations for networked storage enabling reduced downtime to keep mission-critical revenue generating applications running around the clock. Additionally, from a data protection standpoint, storage routers facilitate a host of backup and recovery options such as onsite or offsite mirroring in the event of a disaster. .Operational Agility through Flexible, Scalable Architectures: Savings from the rapid capacity expansion model, and the consolidation across multiple vendors, providing more purchasing control and equipment choices to end users.Technology adds value for the customer everywhere from homes to the corporate world.* A director meets with a graphic designer in Newyork and clients in London, from her desk in Columbus, Ohio and nobody pays for long distance.* In Germany, the world’s fifth-largest retailer uses the network to cut costs, streamline its supply chain, and make shopping a pleasure for customers.
* In North Bay, Ontario, a patient receives operation she needs-from a surgeon 400 kilometers away.* A doorman confirms her reservation, processes her credit card, and creates a room key-all before she reaches the lobby the only thing she has to do this evening is relax.* In a quiet suburban home, mom banks online, dad compares minivan prices and two good friends fight to save the planet from alien invaders-but nobody’s fighting for internet access.* Even if schools are closed, 70,000 students in hong kong can still enjoy lively classroom sessions, interact live with Teachers, and keep in touch with classmates.
How did Cisco Systems become the leader in the network equipment industry? How can Cisco make money despite open standards? What are the principal components of its business strategy? How do these components fit together?Cisco Systems: A quick journey1. Founded in 1984 by Stanford computer scientists who pioneered the router. 2.
Growth through innovation, partnerships and acquisitions. 3. Corporate Culture: Unwavering attention to customer service and militant frugality. 4. Got VC funding in 1987. John Morgridge joined as CEO 5. IPO launched in 1990.
6.John Chambers became the President and CEO in 1995 7.Revenue ( Quarter ended May-04 ) – $ 5.
62 B, (Year 2003-04) – $ 22 B 8.Market Capitalization: $ 130 B (21st Sep 2004)Cisco Systems, Inc. manufactures and sells networking and communications products, and provides services associated with that equipment and its use. Its products are installed at corporations, public institutions and telecommunication companies, and are also found in small and medium-sized commercial enterprises.
The Company provides a broad line of products for transporting data, voice and video within buildings, across campuses or worldwide. Cisco sells scalable, standards-based networking products that cover a wide range of customers’ networking needs. Its products and services help customers build their own network infrastructure, while also providing tools to allow them to communicate with their customers, prospects, business partners, suppliers and employees. Products are used individually or in combinations to connect computing devices to networks or computer networks with each other, whether they are within a building, across a campus or around the world.CISCO: Becoming a LeaderCisco became market leader in telecom industry in no time. It entered the industry in an environment of multiple standards and distributed processing by developing its router technology that allowed different machines operating with different standards to communicate.It used following strategy to attain leadership position:* Innovation: Give customer technologies they needed rather than those that were available in the market.
* Unwavering Customer attention: Top management looking into customer service department.* Set technology standards: Integration of solutions to enable them to be the single solution provider for many of their customers (one-stop-shop).* Diversified product offering: This was achieved through a series of strategic acquisitions of smaller players offering required products that Cisco did not have in its portfolio.* Strategic Alliances / Partnership: Alliances with other technology leaders like Hewlett-Packard, Intel and Microsoft to co-develop products using shared technologies.* Branding: To help build customer awareness. Corporate brand under the “Cisco Powered Network”.Open Standard advantages for Cisco:A “one-stop model” offered by a single vendor typically features vertical integration, closed architecture, and proprietary platforms that perpetuate engineered dependence and forced-fit solutions.
Service provider investment is virtually locked in for the life of the system and scaling is difficult.An “ecosystem model,” the approach Cisco employs, is built through partnerships among companies that share an open architecture based on industry standards. Each partner brings a unique capability and service providers can select from a range of potential solutions that fit their specific requirements. In this way, providers protect their investments and can rapidly deploy solutions. Components provide open, northbound interfaces based on open standards and protocols (such as HTTP, XML, and so on). This approach not only enables partner products to integrate with the Cisco OSS components, but also enables service providers to leverage their existing OSS SML and BML components and integrate them with the other components in the OSS architecture.
Reduced costs, increased market share and accelerated deployment, increased flexibility are some of the advantages:1. Open standard created positive network effects for Cisco. It increased the customer base.2. New telecom companies followed the open standards set by Cisco.
Later, it became easy for Cisco to acquire these companies and integrate them with Cisco.3. A strong movement away from proprietary standards to a greater acceptance of open standard in data processing and transmission assisted Cisco to garner market share.
4. One-stop-shopping helped Cisco to become a preferable suppler for big enterprises.5.
Strategic alliances with technological leaders like Microsoft and Intel helped Cisco to develop products which became industry standards.