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Friday, 23 May 2014 09:30

Things will get worse for tech industry

Written by Nick Farrell

Cicso boss sees even more trouble ahead

While many believed that things were starting to pick up in the tech industry, Cisco CEO John Chambers thinks that it is about to get much worse. Chambers said that the rapid pace of change in the technology industry is going to create a bloodbath for the major tech players, and every other company on the planet.

He said in the next five years two or three of the top five IT companies will be gone or less meaningful. During the opening keynote of Cisco's annual customer conference, Cisco Live he said he knew that Cisco needed to change. The top players are Cisco, IBM, HP, Microsoft, and Oracle and although he does not predict which ones will go by the wayside, he dropped a hint that HP and IBM would be toast.

"When we talk about the top five IT players, watch how disastrous the last 2.5 years have been where an HP and an IBM haven't had revenue growth for two to three years," he said.

This is the chart he showed, documenting how many quarters of growth each have had. It shows Microsoft, not Cisco, doing the best with 14 quarters of 3% or better revenue growth. Chambers said most of Cisco's original competitors have died over the years and, in another chart, subtly hinted that nearly all of its current ones somehow won't make it to 2018.

The vendors he sees going include Juniper, CheckPoint, Ruckus, Palo Alto Networks, Avaya, Aruba, F5, ShoreTel, Riverbed, Huawei, Arista, Fortnet, Polycom, and Brocade. He failed to mention VMware which is currently giving Cisco a good kicking by flogging networking software that runs on cheap, commodity hardware. Chambers more or less dismissed the VMware threat, insisting Cisco would quickly crush it. Chambers also predicts a general bloodbath for all businesses everywhere. He noted that only a quarter of the companies on the Fortune 500 25 years ago are still on that list today.

"Every company in this world has to be realistic ... Out of the private sector companies in this room, regardless of where you are in this world, 87 per cent of you will have a major financial shortfall in the next 15 years, and a little over 10 per cent of you will ever come back from it. And of all the enterprise companies in this world, only a 1/3 of us will exist in a meaningful way in 25 years."

The only way to survive is to cope with the rapid pace of change he said.

Nick Farrell

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