Canada, as the world’s seventh largest IT market, is generally from a vendor’s standpoint a highly competitive and hotly contested geography.
In enterprise networking where Canadian business, although not pioneers of technology adoption, are certainly curious and amenable to investing in the proven value of innovation, you’d expect to see an aggressive community of equipment makers fervently clamouring for the buying dollars of customers.
You’d expect that.
Reality in the Canadian enterprise network equipment space, for a long time, has been that one manufacturer dominates the market and this dominant grip seems to grow tighter each year. We’re all familiar with that network equipment market leader in Canada.
Recent IDC Canada research, which assessed vendor sales and estimated vendor revenues for the year 2003 in a wide range of network equipment sold here shows that this market leading vendor’s revenue in switching is more than double that of eight other major competitors, and in routing is more than four times that of five other major players in the Canadian market.
By virtue of revenues earned, in emerging network technology markets, that same vendor is still way ahead of the major competition in wireless LAN, and security appliance equipment.
It’s a different story, however, in storage network switches and telephony, where others are ahead in terms of what IDC estimates as their Canadian revenues. Although the current leader in more traditional network equipment areas may not dominate the Canadian market for some emerging network technology markets now, who would bet against the eventuality?
Such an assertion for market dominance in emerging technology areas is based on Canadian IT history, which repeatedly shows many of those who compete against the network equipment leader often don’t, or won’t, do what’s required to carve out a bigger share from the powerful incumbent.
Too many network vendors that are otherwise successful in many other regions including Latin America and/or Asia/Pacific act as though Canada is an occupied territory resigned to the leader and deem not worthy a concerted effort beyond extending resources from a U.S.-based operation.
Despite being the world’s 7th largest IT buyers market, few network equipment makers would include Canada among the regions of greatest business opportunity and deserving of a more primary focus. That’s despite that fact that most of these same network equipment makers are apt to extol the value proposition they bring to Canadian customers: providing greater choice of suppliers and alternative products.
From a customer’s perspective, moving to embrace these other suppliers may be less an issue of considering lesser-known brand, and more an expression of confidence lacking in the support and customer responsiveness from these competing suppliers. There’s always the disconcerting question of whether these equipment suppliers will be around for the long term.
Even those “channel resellers” who deal more directly with customers and who represent the “feet on the street” for equipment manufacturers tend to commit more completely to the market leader who has shown continuing commitment. Many competing network equipment vendors don’t do much to cultivate and nurture this community of selling partners.
No doubt it’s a daunting task to unseat a powerful incumbent. But even chipping away at the edges seems to happen rarely.
Competitors say they’ll look to steadily increase market share by focusing on areas of incumbent weakness and new opportunities. But there’s little evidence of significant market share gain at the expense of the market leader’s share.
One might wonder, why not?
For some it seems to be a matter of will and desire. For them, there may be other geographic frontiers to contest, where incumbent market leaders may not exist, and where there are customers who’ve not yet hitched the networking futures to a brand. For others they’ve come too late to market and have been beaten to the punch in Canada by a market leader who’s been relentlessly building greater share. Still others simply don’t seem to put much investment or time in seeking to understand Canadian customers and their needs. They’re content to do the same things in Canada as what’s been done at home in an effort to achieve a measure of success.
With the emergence of new networking technologies come new markets and opportunities. Couple that with the fact that once again, according to IDC research business networks remain a primary focus of investment for Canadians, and it’s clear there is opportunity for determined and committed equipment makers. Canadian customers can only hope for more compelling supplier options and a more competitive market.
McLean is director, strategic partnering and alliances research for IDC Canada Ltd. He can be reached at dmclean@idccanada.com.