Will tighter budgets lead to success for some companies? There are two fundamental strategies that many telecommunications vendors and service providers believe will be their ticket for increased - yes, increased - sales and market share over the next year. Are they crazy - or crazy like a fox?
The first strategy is pretty simple: We're not Cisco.
Everyone is familiar with the reworked cliché of "Nobody every got fired for buying Cisco," but given Cisco's price premiums on equipment across the board, companies are now looking harder at both the initial purchase price as well as the ongoing operational expense of buying Cisco gear (service contracts). People want to get more for their dollars, so doing more than a cursory glance at lower cost alternatives is out - max value for the buck is in.
Can this strategy work? Nortel has conducted a big crusade around being cheaper and more energy efficient than Cisco, but the "energy tax" campaign burned too much money on CNN commercials and viral videos rather than reaching (and reassuring) buyers. Hard to buy from a company that is canning nearly all of its executive management and reportedly looking at bankruptcy.
OK, maybe Nortel isn't the best example.
Start again, and let's assume that you have a solid product, lower cost and a fundamentally sound business. If the customer has heard (preferably good things) about your company and/or product, and you are at a lower cost, you will likely have a good shot winning against Cisco, all other things being equal. This assumes that 1) You can make a case to be on the short list because everyone is positioning them to be "Not-the-Cisco" and 2) Cisco isn't bringing a gun to the knife fight by aggressively dropping prices and/or throwing in other incentives.
Not-the-Cisco is very popular. Maybe too popular if you get tied up in a dogfight with a half-dozen other companies in the same space aiming at the same customers and VAR/channel partners.
Strategy two: Invest carefully, reduce ongoing operational expense, reap savings.
Back in the day when I was running a computer lab during the early '90s downturn (not to be confused with the dot.com/2001 downturn), I actually executed this strategy, buying some new, modern gear, retiring my old legacy gear and coming out on the other side with a net cost savings because the service contracts on the old stuff were outrageous. We could have used a third-party to service the old gear, but it was still A) Old and B) Expensive to maintain.
MetaSwitch makes a great case for junking legacy circuit switches and moving to a (well, its) softswitch. I like to think of it as the "Save Green, Be Green" strategy. Let's face facts: legacy circuit switches weren't exactly built to be power misers. Dropping in a softswitch can save you up to 84 percent on your power bills - that's something a CFO can love and something that Al Gore can get behind.
If you want, you can even ignore Al Gore! CFO love is a beautiful thing. You can save on energy costs, save on maintenance costs and/or service contracts, pretty soon you've found more than enough money to save the 2009 holiday party.
Piling on, you also end up with more features and better capabilities with a minty new 2009 softswitch, and you will likely end up saving floor space over a circuit switch. What you do with the extra space is left as an exercise with your new BFF, the CFO.
- Doug [1]
Links:
[1] mailto:doug@fiercemarkets.com