| With a sufficient advertising budget, Digital should continue to get
some name recognition. We have great products, but we are just
beginning to advertise sufficiently.
The DEChub900 ads are great. They are consistent. It may take 10
views of an ad before a customer takes notice, but the consistency will
eventually pay off.
Low prices, great products and good advertising will gain market share.
-Dan
From: MKOTS1::SKONETSKI "The difference between obstacle and opportunity is attitude 11-Mar-1994 1806" 11-MAR-1994 17:17:10.06
To: @WW.DIS,@NET.DIS,@CHAMPIONS.DIS,@TECH.DIS;
CC:
Subj: Digital is a Hub Player
From: META4::NET_PARTNER "10-Mar-1994 1246" 10-MAR-1994 13:15:23.83
To: @NET_PARTNER
CC:
Subj: RE: Response to: Gartner "DEC not a Network hub Player" !! !(From: NAC::ALLEN "HUB MARKETING LKG2 226-7223")
------------------------------------------------------------------
THE MEMO IS FROM STEVE ALLEN, BILL MELLO AND ELLEN QUACKENBUSH
------------------------------------------------------------------
In a recent memo, Bob Deep of Digital Network Consulting quotes one of
his customers as stating that Gartner Group believes that Digital
is not, and will not, be a player in the intelligent hub market in the 90s.
Nothing could be further from the truth!
However, we were concerned enough by the comment that we called Bill
Redman, director of Gartner's network research services to clarify the
Gartner position. Bill stated that Gartner continues to rank Digital as a
second tier hub vendor--aptly termed the hub "Challenger" group--right
behind the top tier triad of Synoptics, Cabletron and Chipcom. Gartner has
been and continues to be positive about Digital's prospects in the hub
market.
Digital is poised to make that leap to the top tier and is making a
conserted effort to become number 2 or 3 in the hub market:
o Digital's hub products have been a great success. We have shipped over 1
million Ethernet ports since the introduction of the DEChub 90 and
in the first 60 days of the DEChub 900, have shipped over 1000 units.
Rising Star Research, a West Coast market research firm, ranks Digital as
the #6 hub vendor worldwide on the strength of the DEChub 90 shipments
alone.
o Digital is drastically reducing its sale of third-party hub products
(including Synoptics, Cabletron and Chipcom). We estimate that during
FY93, Digital accounted for at least 25% of Chipcom's shipments.
Removing this cushion, would drop Chipcom to only 3.1% of the hub market--
or only #9 worldwide.
o The company is making major investments to rapidly expand our overall
market penetration in hubs using indirect channels. These investments
include increased financial incentives, advertising and direct marketing
campaigns, and greater technical support.
Upon closer investigation, it appears that the customer was referring to a
recent Gartner publication (the February 18th issue of "Point to Point")
and misread Gartner Group's observation that a market consolidation is
inevitable over the next 3-5 years and that many middle tier vendors "would
not make it" to conclude that Digital would not make it. In fact, part of
Digital's hub strategy is to take advantage of this market consolidation
to surge ahead of less aggressive competitors to join the top tier.
For clarification, we have attached the text of the original research report
on intelligent hubs, which was written by Fred McClimans of Gartner Group
and Bob Deep's original note.
If you have any further questions about the DEChub family and our marketing
programs, don't hesitate to call either Bill Mello (226-7356) or
Steve Allen (226-7223) of the Hub Product Marketing Group.
If you have any questions about the Gartner Group research, call Ellen
Quackenbush (226-5146) of the NIPG Planning and Strategy Group.
GARTNER GROUP
LOCAL AREA COMMUNICATIONS
Fred McClimans
September 27, 1993
LAN HUB VENDORS: EVERYONE WANTS TO RULE THE WORLD
Summary: The LAN hub market has attractd many new player as it surges above
the $3 billion mark. Here, we present our view of this market and explain
how we separate the leaders from the losers.
Figure 1: LAN Market
($Billions) 1994 1997
---- ----
Adapters $1.1 $1.8
Bridges/Routers 1.7 2.6
LAN hubs 3.8 7.0
TOTAL $6.6 $11.4
Figure 2: LAN Hub Vendor Positioning
Leaders: Synoptics, Cabletron, Chipcom
Challengers: 3Com, UB, Digital, HP, Xyplex, Proteon
Niche Players: Timeplex, ODS, RAD, Networth, Hughes, DSI,
Thomas Conrad, Lannet, Fibermux, SMC, Bytex,
Asante, Farallon, Synernetics
Non-players: Microdyne, D-Link, Allied-Telesis, Canary
Representing more than 50 percent of the total LAN market, the LAN hub market
segment has attracted its share of entrepreneurs, from vendors that focus
on LAN-only products to those who relying on increased LAN sales to "save"
them from declining core businesses, such as muxes or data switches. This
rush has resulted in a crowded field of competitors, which makes for a
confusing mess for potential "LAN-literate" users.
LAN MARKET DIRECTION: The LAN market will account for more than $6 billion
dollars in revenue in 1994 and more than $11 billion by 1997, representing
a cumulative annual growth rate of slightly more than 22 percent (see
Figure 1). Of this revenue, LAN hubs will account for almost $4 billion in
1994 and approximately $7 billion by 1997. The LAN hub
market includes both intelligent and non-intelligent LAN hubs, for both
standalone , stackable platforms and chassis-based platforms.
In evaluating the market, we have mapped the hub vendors into four
categories: "market leaders," "challengers," "niche players," and
"non-players." (See Figure 2.) The vendors are evaluated against two broad
criteria: breadth of product line and delivery of product.
Breadth of product line maps directly to the diversity and market coverage
that a vendor's product addresses. This is influenced by the vendor's
vision of the market, but is not a direct measure of this vision,
i.e., vendors with strong vision may have a very focused or limited
product line. Delivery of product measures several key capabilities:
product quality, marketing strategy, market share and technology leadership.
Our positioning of vendors is a subjective measure, often taking into account
many "intangible" aspects, such as user comments or feedback pertaining to a
particular vendor, and should not be interpreted as a measure of simple
market share, either current or cumulative.
MARKET LEADERS: The current market leaders include veterans SynOptics
Communications Inc., and Cabletron Systems inc., as well as newcomer
Chipcom Corp. (with an assist from IBM and Digital Equipment Corporation).
Chipcom, while still a small company compared to the other two leaders, has
gained this position through strong market momentum, displacing Ungermann-
Bass Inc., which has shown a lack of consistent momentum during the past
year.
MARKET CHALLENGERS: The challengers, often referred to as "second teir"
vendors, are in the most precarious position of any vendor group. These are
players with sufficient size and market command to attempt a run at the top
tier. This is a risky exercise, however, since leader-board status requires
the ability to take on not only other challengers, but other leaders as well.
We believe that several vendors in the challenger category will fail in their
attempt to compete with the market leaders during the next two to three years
(0.75 probability).
NICHE PLAYERS: The key philosophy that allows many niche vendors to exist is
"never pick on someone you cannot beat". In the LAN martket, this translates
into a strategy focused on providing services to a vertical or horizontal niche
that has been overlooked by the larger vendors. As such, niche players can
build sufficient market momentum, as Chipcom has over the past two to three
years. The biggest risk niche vendors face is that of being steamrolled by
major players.
BOTTOM LINE: The current glut of vendors in both the niche and challenger
market segments will not remain in place for the next three to five years; in
its place, we antipicate a further collapse of the middle tier, i.e.,
challengers and aggressive niche vendors (0.8 probability). Non-leader vendors
must either make a serious run for the leadership tier or focus on niche status;
the challenger that hesitates is likely to lose market share as the leading
vendors continue to dominate the mass commercial market. Users should
recognize this trend and evaluate their potential vendor options accordingly,
including avoiding vendors that do not have a viable "vision" or strategic
market plan. Type A users, i.e., aggressive implementers, should consider
any reaonsable vendors that offer new technological solutions. Type B and C
users, i.e., main-market and cautious implementers, should focus on conservative
vendor selections involving market leaders and aggressive challenger vendors.
I N T E R O F F I C E M E M O R A N D U M
Date: 04-Mar-1994 10:01am EST
From: VMSMail User NET_PARTNER
NET_PARTNER@META4@MRGATE
Dept:
Tel No:
TO: VMSMail Distribution List ( _@META4::NET_PARTNER)
Subject: Gartner-"DEC not a network hub player" 1 !(From:
UNYEM::UNYEM::MRGATE::"A1::DEEP.ROBERT")
From: NAME: ROBERT DEEP @SYO
FUNC: DIGITAL CONSULTING
TEL: DTN 256-5708 <DEEP.ROBERT AT A1 at UNYEM
at NQO>
To: net_partner@meta4@vmsmail
One of my customer's just returned from a Gartner Group briefing, and said
that Gartner is stating that Digital is not, and will not be a player in
the Smarthub marketplace in the 1990's.
Would anyone care to respond to this? Do we have contacts at Gartner that
we can query on this statement?
Bob
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