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Balancing Act: Do Core Products Suffer When Vendors Seek New Markets?

Breaking ground on new and emerging technology areas is what keeps this industry alive and kicking. Yet established, market-leading technology vendors face a tricky balancing act when they set their sights on new frontiers. At the same time they are opening their wallets and committing their engineering teams to innovate the next best thing, companies […]

Written By: Carolyn April

Jun 18, 2009

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Breaking ground on new and emerging technology areas is what keeps this
industry alive and kicking. Yet established, market-leading technology vendors
face a tricky balancing act when they set their sights on new frontiers. At the
same time they are opening their wallets and committing their engineering teams
to innovate the next best thing, companies can neglect the core products that
drive their revenue engines. Over time, complacency can result in eroding
product quality or simply lack of innovation or enthusiasm. That’s a
prescription for customer defections the next time a refresh cycle for core
products comes around.

It’s already happening in the case of companies such as Cisco, according to
some solution providers in the field. Cisco has launched ambitiously and with
great fanfare into sexy, high-margin areas like unified communications, blade
servers and virtualization. But the networking giant also has been accused of
taking its eye off its core switching and routing gear.

For integrator and hardcore Juniper partner Chris Burgy, CTO
of Archer Technology Group in Southern California,
Cisco’s distraction hasn’t been a bad thing. Several large customers,
disappointed with the quality and innovation of Cisco’s core networking gear,
have hired Burgy’s company to install alternative products.

“We just eat Cisco’s lunch with a story that is really easy to articulate: one-third
of the cost for operational expenditure, a much better product that’s less to
buy and to maintain,” Burgy recently told Channel Insider.

Burgy made a further point that’s salient. Can Cisco do both things well—enter
a multitude of new areas while continuing to advance heritage products to keep
up with more nimble alternative competitors?

“It’s challenging,” Burgy said. “I don’t know how they keep their focus.”

Cisco’s not alone in dealing with this dilemma. Microsoft is trying to blaze
its way into new markets to catch up to rival Google and claim some identity in
the rapidly growing software-as-a-service space. But at the same time, the
software giant must keep the massive Windows and Office license renewal engine
going or risk losing the overwhelming majority of its revenue base.

Vendors and solution providers need to continue moving forward into lucrative
new markets and skill areas, where the opportunity for services attached to
revenue and high margins is great. That said, solution providers should also
keep an eye on how their vendor partners are tending to those legacy products
before unhappy customers start picking up the phone wondering why you sold them
this piece of, well, you know.

It’s also a good idea to have some alternative vendors in your lineup, so you
aren’t caught flatfooted when a customer demands a change.

Have you heard any complaints? Let us know.

Balancing Act: Do Core Products Suffer When Vendors Seek New Markets?

Carolyn April

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