Abstract

In the global networking equipment market, Cisco remains the dominant player in both the router and switch segments. Rivals such as Nortel, Extreme, and Enterasys have so far failed to take significant market share away from Cisco in the switch market. In the router market, Cisco has maintained its dominance in enterprise routers, although Juniper is a serious threat in the core router segment. Not only does Juniper have the edge over Cisco in product technology, but because core routers are a new product type, the competitive balance in this segment is still in a state of flux, giving Juniper room in which to grow.

The situation in the Chinese market is rather similar. Although Cisco was the first of the leading networking equipment brands to move into the China market, it has had to face competition from local Chinese brands that owe their rapid development partly to China's huge size - which makes it difficult for any single brand to achieve a dominant position in every region - and partly to the support given to the domestic networking equipment industry by the Chinese government. Huawei is one of the most successful of these domestic brands.

Huawei has been able to learn its trade - in terms of both technologies and products - in the Chinese domestic market, before expanding into international markets with a low-price strategy. The alliance with 3Com has enabled Huawei to create a more comprehensive product line that will contribute to Huawei's emergence as a "rising star" in the global networking equipment market.

The global networking market is currently undergoing a process of transformation. In the telecommunications network market, there is a shift away from ATM　 towards IP, while in the enterprise network market the general trend is towards Gigabit networks. The home network market is still in the early stages of development. The European, US, and Japanese markets are currently witnessing a wave of upgrading to new-generation equipment, whereas in China, Southeast Asia, and South America, market demand is mainly for initial network establishment rather than replacement of existing equipment.

Responding to these developments in the market, Huawei has rolled out its U-SYS and Quidway series products to target the telecommunications network and enterprise network markets, while at the same time working to broaden its product line. Huawei's low prices help it to break into new markets, but when it comes to replacing existing equipment, the enormous quantities of Cisco equipment that are already in operation around the world put Cisco at a significant advantage. Emerging markets will thus provide the best environment for Huawei to leverage its low prices.

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