Tomahawk, WI 11/19/2013 (BasicsMedia) – Cisco Systems, Inc. (NASDAQ:CSCO) with a market cap of $113.52 billion, is the networking kingpin. The company has one of the broadest markets spanning the world. The company’s list of customers makes the who’s who in the tech industry. Given the superior nature of its technology, CSCO doesn’t price its products for a penny. They cost something and those looking for high-end technology have no problem paying a fortune for the devices.

However, lately, competition is titling the market scale against Cisco Systems, Inc. (NASDAQ:CSCO) and its sales are not where they used to be in the past years. In its recent quarterly results, CSCO reported below Wall Street and investors where not amused, resulting in the stock going through value erosion,  losing around $10 billion in market value. New entrants into the networking equipment business understands that the market has increasing become sensitive to pricing and they are using this to cut CSCO down to size.

Big spenders in CSCO technology finding options

Even as competition grows in networking equipment market, Cisco Systems, Inc. (NASDAQ:CSCO) has always delivered higher revenue and earnings from this segment, given the trust that tech kingpins such as Facebook Inc, Google Inc and Amazon Inc among other giant tech companies have in its products. However, CSCO’s threat is coming from this very segment that has helped it earn billion of dollars for its shareholders and investors.

It is reported that Google Inc, Facebook Inc and Amazon Inc are among Cisco Systems, Inc. (NASDAQ:CSCO)’s faithful customers that have been working on their own open networking solutions to dislodge themselves from CSCO’s closed systems. If this does happen, the San Jose company would be facing a baptism of fire in the market considering that its fortunes in the emerging markets have also been dwindling as noted in the Nov. 13 Q1.14 earnings report.

The aforementioned three tech giants are seeking app based networking solutions for their systems which would be less expensive and less costly in terms of management. Running Cisco Systems, Inc. (NASDAQ:CSCO) not only requires big investment to acquire the high-end devices, but they also require to high experience for the systems administrator who are usually certified by CSCO. While the firms while have reduced their operation costs as concerns networking equipment, this would be a crippling blow to CSCO.

China is already a slow market for CSCO networking technology and the company has admitted that it’s facing reduced revenue collection in the next quarter and beyond due to decline of sales in the emerging markets. The alleged NSA spying has been linked to the decline of CSCO’s networking systems sales in China and other South American markets.

In the case of its customers finding their own networking ways, Cisco Systems, Inc. (NASDAQ:CSCO) can still move to retain them by lowering the cost of its devices and also rolling out open technology. Moreover, the company needs to up its campaign in the emerging markets socially in African where there still lie huge potentials for the networking industry.

While there are particular issues which are unique to CSCO as company, it is important noting that the technology equipment industry has generally had a slow growth in the recent times and this can be seen in the performance of CSCO’s peers such as Juniper Networks Inc and Brocade Communications Systems.

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