Search and DocFinder
 
Search help/advanced search
  

Vendor Product Showcase



News NetFlash: Daily News Internat'l News This Week in NW The Edge Features Research Buyer's Guides Reviews Technology Primers Vendor Profiles Forums Columnists Knowledgebase Help Desk Dr. Intranet Gearhead Careers Free Newsletters Subscription Center Seminars/Events Reprints/Links White Papers Partner with Us Site Map Contact Us Home








The 10 most powerful companies in networing

Send to colleague

The roster of elite network companies remains fairly consistent year after year, with stalwarts such as AT&T, Cisco, MCI WorldCom and Microsoft unquestionably grabbing seats on our "10 Most Powerful Companies in Networking" list.

Still, some jockeying goes on to fill out the last third or so slots. See how companies rated among the Network World staffers, analysts and other industry followers who vote on this power 10. Then take a look at how the same companies ranked among the 250 readers who participated in our annual Powerometer poll. You'll note some interesting disparities.

AT&T

Have you noticed how quiet AT&T has been about the proposed merger of MCI WorldCom and Sprint? Usually competitors protest mergers of their rivals.

Likely reason for the silence: AT&T knows it'll be the safe haven for disaffected MCI WorldCom and Sprint corporate customers if, as many observers believe, the merger turns into a mess. And that plays right into AT&T's strategy of finding new revenue to offset the bleeding in its consumer telephony business.

Chairman and CEO C. Michael Armstrong's first priority is top-line growth. And that's been lacking at AT&T recently. Excluding AT&T's purchases of IBM Global Network and cable company Tele-Communications, Inc. (TCI), AT&T's year-over-year revenue growth for the third quarter was 5.3% - anemic for the Internet age. The destruction of the dime-a-minute barrier for consumer long-distance led to a 4.7% decline in consumer revenue, and growth in corporate voice and data has been holding steady in the mid-teens.

The real stars are AT&T's wireless and outsourcing businesses, both rocketing up more than 40% in 1999. For all of the hullabaloo over MCI WorldCom's grab for Sprint PCS, AT&T's wireless portfolio is triple the size of Sprint's. And in 1999, AT&T Solutions, the outsourcing and managed-network unit, brought on such diverse businesses as AlliedSignal, McDermott International, brokerage firm A.G. Edwards and drugstore chain CVS.

But big wins in the enterprise market aren't enough. Armstrong must boost performance from his mass consumer and business transport sectors, and he's fighting key personnel defections. Business services President Bob Annunziata, who had run Teleport - the alternative local carrier AT&T bought in 1998 - left last spring to head Global Crossing. Consumer chief Leo Hindery, who had been No. 2 at TCI, bolted in September just as AT&T began the massive job of converting its cable plant into two-way Internet and telephony facilities.

So far, TCI is contributing about $1.4 billion per quarter in extra revenue but not a dime in profits. Sometime in 2000 AT&T will have to increase revenue for cable-modem service instead of ordinary cable TV if its bet on competing with the local telcos is to contribute to AT&T's 21st century leadership.

Cisco

The TV ads say it all: Virtually all Internet traffic travels across Cisco systems.

With that kind of clout, Cisco continues to play a key role in shaping and delivering the Internet economy. As more users take advantage of the Internet for business and commerce, the more dependent they become on Cisco for providing the infrastructure.

Indeed, if customers vote with their dollars, Cisco wins by a landslide. Cisco announces at least four new customers every month. Having already sewn up the enterprise market, nearly all these latest contracts are in the fast-growing service provider realm.

As a result, Cisco wrapped up its 1999 fiscal year on July 31 with revenue of $12.2 billion, an increase of 43% over the previous year. The run rate for fiscal year 2000 is $16 billion. The company is among the most valuable in business today with a market capitalization of about $300 billion.

No wonder Cisco President and CEO John Chambers likes to boast that his company is growing faster than any key competitor, and is the fastest growing and most profitable company in the history of the computer industry. This perhaps makes Chambers the most powerful CEO in networking. But even outside of networking, he is considered one of the most innovative and dynamic leaders in global business today.

Cisco is also known for shaping technology. The company's market share establishes Cisco technology as the de facto standard in data networking. Cisco forces all competitors and standards bodies to build Cisco-compatibility into their products and specifications. It also makes Cisco ownership a goal for many a network start-up. True to course, Cisco has acquired more than a dozen companies this year - Cerent,Calista, Monterey Networks and Sentient Networks among them.

Dell

Dell, capitalizing on the success of its direct sales model, made a strong go of it in the enterprise network market this year by fleshing out a full range of servers and storage. The servers run the gamut from departmental and workgroup servers to powerful eight-way servers for use in transaction-intensive environments.

Two Dell servers even won Network World World Class Awards for scoring above a 9.5 (out of 10) in comparative tests and Best of the Tests Awards for rating among the top 10% of all products tested through October. Dell was one of only two vendors that had more than one product earn either of these awards. [See our reviews of the PowerEdge 6350 and PowerEdge 4300]

In the burgeoning storage arena, Dell moved into the high-end of the market with the introduction of a 4-terabyte disk drive. And the company made its first-ever acquisition by buying Convergenet, which makes a magic black box that lets any server attach to any type of storage. [See Dell's first-ever acquisition fills high-end storage need]

Besides delivering solid products, Dell rolled out a set of service programs aimed at helping customers implement and install its hardware. Two multibillion-dollar equipment and technology deals with IBM bolstered its portfolio.

Dell also became a factor in setting standards in the past year: It was one of Intel's first partners in the System I/O specification, which affects the future system bus. [See I/O standards group takes new name] And Dell turned up the heat on e-commerce. At present, the company does $35 million in business over the Internet per day. As for its mainstay PC business, Dell took over the No. 1 market share slot in the U.S. and the No. 2 position worldwide. The company is turning users' heads, and in the hot PC world, any sales Dell can take from its eastern Texas rival, Compaq, pushes it toward dominating the market.

In 1998, Dell revenue was $18.2 billion; its revenue is tracking this year at a 42% increase.

IBM

How did staid, stolid old fogy IBM make it onto this list?

The company might have sold off its switching and routing patents to rival Cisco, but it remains a market leader in SNA and token-ring technologies, and it does nothing these days except talk about the networked world of business.

Big Blue is actively pushing to make its mainframes, midrange and PC servers all Internet friendly. Meanwhile, its massive storage division has been refocusing itself to become a major storage-area network player.

IBM boasts the largest services organization in the world, with a heavy focus on e-commerce and SNA-to-IP migration. In software, IBM is second in volume only to Microsoft, spearheading work on Java, business intelligence, data mining and XML.

Its SecureWay networking unit is an industry leader in creating a comprehensive package for network security, from firewalls to content filters to encryption and more, all centrally managed. IBM also has an impressive array of network software products - the WebSphere and Lotus Web serving and e-mail packages; Tivoli enterprise management tools; the DB2 database; and the MQSeries application messaging product, among others.

IBM is active on industry standards bodies and has been one of the most vocal proponents for the creation of e-business privacy policies. The company will continue to exert influence with its OEM business - supplying chips, disks and other components to major server and network vendors.

IBM's steely Chairman and CEO Lou Gerstner has reassured employees, stockholders and customers that IBM is going to be a major force in the network. Whatever the long-term success, he's got all 300,000 IBM employees thinking networking in general and e-business in particular.

So it really isn't your father's IBM anymore.

Intel

It used to be that Intel more or less dabbled in networking. Not anymore - it got serious, real serious, about networking in 1999.

First came the technology investments. The company has bought its way into hot product areas, such as virtual private networks via the Shiva acquisition and Gigabit Ethernet switching through its XLNT buyout. Intel's goal is to provide small and midsize companies with key network products, running the gamut from network interface cards to routers.

Then came the Internet services assault. Who could have imagined Intel moving into the ISP business? But indeed, it has.

In September, the company announced the creation of the Intel Online Services division for Web hosting. Out of the starting block, Intel Online Services was running with two operational Internet services centers (at least three others are planned) and providing collocation services to customers. In early 2000, Intel will accelerate from Web hosting to the provisioning of application services, including e-commerce. It wants to work directly with enterprise users as well as provide the hosting facilities for other service providers, and it seems as if the company is being taken seriously. [See Intel launches Web hosting division]

Intel Online Services is working with UUNET in creating the Internet services and with top consulting companies on its application hosting plans. Meanwhile, it's already garnered Web hosting business with organizations such as eHobbies and Excite@Home Shopping Services. Intel's chief concern remains selling processors, and what better way to drum up business than by helping build networks capable of handling increasingly faster computers? Its network business accounted for about 10% of the company's $26 billion in 1998 revenue.

MCI WorldCom

MCI WorldCom's year has been yet another one full of acquisitions as the company solidifies its position as one of the largest service providers in the country and rounds out its portfolio with wireless networks and services.

MCI WorldCom acquired fixed wireless service provider CAI Wireless for $213 million and wireless paging company SkyTel for $1.8 billion, and invested $300 million in wireless Internet access service provider Metricom. And last but certainly not least, it's in the midst of acquiring Sprint in a deal valued at $115 billion. [See MCI WorldCom wired for wireless and Users blast WorldCom merger]

The combined entity, which will simply be called WorldCom, will include four frame relay and ATM networks, two national ISP networks, two long-distance voice networks and multiple local voice networks scattered throughout the country. And most importantly, MCI WorldCom will be getting Sprint's crown jewel, a digital wireless network that reaches more than 280 markets in all 50 states. Sprint PCS is the largest personal communications services network and a huge win for MCI WorldCom.

MCI WorldCom announced the merger plans in early October, just two months after it suffered its worst public relations nightmare. Due to an overcongestion problem on a legacy frame relay network, more than 3,400 MCI WorldCom frame relay customers experienced everything from dropped packets to complete loss of service. They received an unpleasant message: Integration problems are still very real 17 months after the MCI/WorldCom merger. At best, business users can only question how well MCI WorldCom will integrate Sprint assets into its existing network hodge-podge.

But these complaints haven't seemed to hurt the service provider's stock price, which continues to grow. In fact, as of press time, it was up $20 over the year prior.

Microsoft

Need we say more about Microsoft's power than did U.S. District Court Judge Thomas Penfield Jackson?

In November, the judge declared the company a monopoly in the operating system market as part of his findings in the government's antitrust suit against the software giant. [See Judge finds Microsoft wielded monopoly power]

That's a federal mandate on Microsoft's strength. Although, in due time, it's a mandate that may eventually help weaken the company.

But Microsoft wasn't just sitting in court in 1999; it recreated itself in the eyes of the Internet. The company was reorganized into divisions focused on customers, including those in the enterprise, with no-nonsense President Steve Ballmer at the helm.

One weakness the company showed during the year was Windows 2000, which is still limping toward final release. But even the much-delayed operating system, with its unheard of 750,000 beta testers, showed the strength of the company's customer base.

Despite a number of key defections, including Brad Silverberg, who was instrumental in developing Windows, Microsoft grew. Revenue in 1999 was up $4.5 billion over the $15.3 billion reported in 1998. On the Windows platform alone, revenue grew by $2.2 billion, nearly double the growth between 1997 and 1998.

Microsoft also sought strength by diversifying, investing in cable TV, broadband, service providers and wireless ventures. The most dramatic investment was a $5 billion stake in AT&T. The deal will put Windows CE in five million AT&T cable set-top boxes. Microsoft also released a hosted version of its Office productivity suite, the strongest indication yet of its plans to bull into the application service provider market. [See Microsoft puts up $5 billion to boost its broadband presence]

In short, look out 2000.

Nortel Networks

For Nortel Networks, 1999 will go down in history as the year in which its market value reached $100 billion. Surely that places the company in the big leagues, as if it wasn't already there. Granted, Nortel has had its difficulties in the enterprise market. But it is the only router vendor in sight of Cisco, and the company is getting tougher by the day. In early November, Nortel slashed prices on its enterprise access routers. Customers shopping around will find the Nortel routers at half the list price of comparable Cisco products.

Aggressive router pricing is just one of the ways Nortel expects to gain an edge in 2000 (CEO John Roth says he wants to boost corporate sales by 10% next year). Another way is by licensing software that makes it easy to IP-enable just about any device you'd want connected to the 'Net - servers, PCs, network processors, mass-market appliances, set-top boxes and mobile devices.

The software, called Open IP Environment, will provide IP functions such as routing, tunneling and security, and IP applications such as policy and network management. Nortel says it already has 75 licensees for the software, and Intel has committed to offer parts of Open IP Environment with its recently announced Internet Exchange Architecture. [See Nortel opens up routing code ... again]

Nortel has been fairly acquisitive in 1999, as well. It's working on the acquisitions of Clarify, from which it gets e-business software; and Qtera Networks, for optical networking technology; and has completed the buyouts of Periphonics, for its computer-telephony expertise; X-CEL Communications, for its service-level agreement products; and Shasta Networks, for IP products. [See Nortel buys customer relationship firm for $2.1 billion, Nortel to buy Qtera for $3.25 billion and Nortel buys call center vendor]

Nortel's tough posture in 1999 has led to a tripling in its stock price and a rise to $100 billion in market value.

Novell

Unlike the majority of the companies on our "10 Most Powerful" list, Novell isn't making a repeat appearance. The company's performance just wasn't quite up to snuff in 1998. But 1999 has been Novell's year, and the company has handily reasserted itself as a top player in the network business.

Novell doesn't have nearly the financial might of the other companies here, but still, it's going - and growing - strong. The company closed fiscal year 1999 (ended Oct. 31) with revenue of $1.3 billion. It attributes the 17% increase over 1998 year-end revenue to directory-related business.

Indeed, Novell pushed hard in 1999 to secure dominance in the directory market. Its most recent manifestation of that thrust was the mid-November announcement of eDirectory, targeted at dot-com ventures, and Novell Directory Services Corporate Edition, an eDirectory-based application tailored for use within the corporate firewall. The backing of big-name users such as CNN is a definite plus. [See More on Novell's NDS eDirectory and Novell's eDirectory spans platforms]

Novell also has big plans for a metadirectory, via its announced dirXML software. DirXML will use XML-based metadata to manage a growing range of applications, services, data types and other resources. Novell's plans so impressed James Kobielus, a Burton Group analyst and Network World columnist, that he chose dirXML as a category-breaking product in our Best Issue. [See his column]

While NDS stars in Novell's comeback, products such as NetWare 5 and ZENworks have had their moments. And in our recent Best Issue reader surveys, Novell bested all other network players in the "Best Vendor Web Site" category and competitors such as Microsoft and SunSoft in the network operating system category.

We'll see if Novell can carry the momentum through 2000 - and the release of Windows 2000 and Active Directory.

Sun

Powerhouse Sun reshaped itself this year as an Internet enabler, capping the transition by forging an alliance with Lucent to build a network infrastructure for supporting next-generation 'Net business applications.

As part of the deal, Lucent will spend $500 million over the next seven years on Sun servers and Solaris operating system licenses. It'll be using those products in a new wireless network and for optical networking. Additionally, Sun and Lucent will jointly market network systems for e-business to enterprise users and service providers.

Sun already had been doing so, having turned to service providers to supply applications, e-commerce and network services, and having partnered with Motorola to drive the convergence of wireless IP with voice, video and multimedia. Sun also partnered with America Online to develop e-commerce applications, hence the Sun-Netscape Alliance, and to use Java to help users access AOL.

On the product front, the company announced iPlanet Webtop, software that gives users access to network applications, files, calendars and e-mail from a Web browser, and allows customers to build secure portals for mobile employees and supply chain customers.

This past year Sun also released Version 2 of Java, an environment for developing Web-centric applications that can run on any platform, and introduced Jini, its plan to network-enable any type of device regardless of underlying software or hardware. In addition, Sun was active in storage and operating systems, unveiling Jiro, an open storage management specification, and Solaris 7, its 64-bit operating system for Sun servers and workstations.

Sun revenue increased to $11.7 billion this year. However, the company closed 1999 on a downbeat, announcing it would no longer push Java to become an international standard.

1 Microsoft 80.9 80.5 0.5 1
2 Cisco 80.2 75.2 6.2 2
3 Intel 75.9 73.9 2.6 3
4 AT&T 71.0 66.8 5.9 5
5 Lucent 70.8 66.4 6.2 6
6 Sun/Netscape 70.6 63.2 10.6 9
7 IBM 70.5 66.4 5.8 6
8 3Com 67.7 67.7 0.0 4
9 H-P 67.6 62.6 7.4 11
10 MCI WorldCom 67.1 65.4 2.5 8
11 Oracle 66.9 62.0 7.4 12
12 Nortel 62.6 55.6 11.2 17
13 Novell 62.3 62.8 -0.8 10
14 Network Assoc. 60.7 54.1 10.8 19
15 Sprint 59.4 57.0 4.1 15
16 BellSouth 58.9 54.9 6.8 18
17 Bell Atlantic 58.3 56.3 3.4 16
18 Compaq 57.6 61.5 -6.8 13
19 Computer Assoc. 56.4 53.3 5.4 20
20 GTE 54.4 53.3 2.1 20
21 Qwest* 51.5 N/A N/A N/A
22 Cabletron 50.8 52.0 -2.5 22
23 SBC 50.0 51.2 -2.4 23
24 USWest 49.0 47.8 2.6 25
25 Newbridge 40.5 44.4 -9.4 26

Send this article to a colleague

Recipient's name:

Recipient's e-mail:
 Your name:

Your e-mail:
Comments:


Feedback

Tell us your thoughts on this article or the issues raised in it. We'll cc: the author and editors on all comments.

Comments:

Name:
E-mail address:

Can we post your comments in an online forum on the topic?
Yes No

What did you think of this article?
Very useful Somewhat useful Not at all useful

Would you want to see:
More articles on this topic
Fewer articles on this topic

Thank you! When you click Submit, you'll be taken back to this article.

Related links
Interactive power-o-meter
Interactive powerful people
Profiles in Power
Profiles in Power
Power Struggles
Power Sign-off
The Signature Series




  Copyright, 1995-2001 Network World, Inc. All rights reserved.