Is Cisco threatened by open source?

I suspect Cisco worries a lot more about Chinese competitors like Huawei, whose 2006 sales target is one-third Cisco's, than it does about open source.

Open source compresses margins. So in asking whether Cisco is pressured by open source maybe we should look there first.

Open source fans should look away.

Cisco currently enjoys a net profit margin of 19.59%. That's down from last year, but 2005 was a record. Before 2004, in fact, Cisco never broke 19% on this measure. Even during the peak of the Internet boom, in late 1999, it was at 17.25%.

If Cisco margins are being hit by open source, the impact is, at best, marginal.

So far most of the talk about Cisco being dumped for open source comes from open source vendors themselves. Or it's anecdotal.

I suspect Cisco worries a lot more about Chinese competitors like Huawei, whose 2006 sales target is one-third Cisco's, than it does about open source.

Products like the SIPbox sell well only in some portions of the market, in customer and product niches.

But I could be wrong. Have you dumped Cisco for open source lately? Do you want to?

 

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