Tom DeReggi wrote:
Answer #1: Thats debatable. Do you not recall year 2000. 26 of the
largest 29 telecom companies filed for Bankruptcy.
Name brand ment bankrupt. Even for Cisco! Lets not forget who the
largest investor was in Cogent, now Cisco's owned network.
Back then folks were building companies with different understandings of
the market than today; name brand gear had nothing to do with it.
Certainly, plenty of open source companies didn't make it either.
There is some irony here. I'm happy with Cogent. I put my confidence
in Cogent a soley Cisco Name Brand equipment network. Well for my
backbone that is. Even though I religious have chosen a proprietary
modification of Open Source on our local transport network. But
Cogent's bankruptcy was highly due to not being able to afford their
own Cisco equipment. So moral of this story... USe Cisco when someone
else pays for it, so they go bankrupt and not you.
That isn't the moral of the story; its not even a good story. Cogent was
recently trading at a new 52-week high until they decided to raise 93
million on a stock offering. I invested in Cogent when they were trading
in the low $4s and sold around $10. I am quite happy with my return on
investment. Would I be able to say that about your company? Don't answer
that.
Investors look for companies that have a real opportunity to gain
significant market share due to a competitive advantage. However, these
same investors want to limit their risk by making sure the company in
question doesn't risk too much. That means if you are going to be
different than other telecom companies then pick and choose carefully
what standards you follow and where you innovate.
Answer #2: Because people that can afford name brand have capitol and
funding. And logically companies that have adequate capitol and
funding often do better than companies that do not. The missing peice
of this puzzle is.... How well would a company with equivellent
funding and capitol do if they chose Open Source instead? I'd argue
they'd be a stunning success. The only difference is that they would
be more likely to invest more in their employees than in their
equipment vendors. Possibly encourage migratation to an employee
owned company, or where the wealth got spread more evenly between the
participants.
No serious VC would invest in a telecom company that didn't use name
brand gear for their network. It doesn't make any sense to do so. All in
all the gear may be the same, but why take the extra risk. When it comes
right down to it, name brand gear isn't that much more expensive. You
should be able to make a business using name brand gear just fine.
I think you missed the boat on this topic. Large companies (well
funded and capitolized) could do well with Open Source, because they
are more likely to reach the economic proportion (growth) to spread
the high cost of maintenance and software development between many
subscibers. The providers that suffer from Open Source sometimes are
the smaller ISPs. The reason is they under estimate the time involved
in Open Source, and do not have enough scale (subscribers or revenue)
to justify the costs of addative development.
Your last statement is the reason to avoid anything that is not your
core competency. I have decades of software development experience, but
we pay software vendors for things like CRM, accounting, case
management, etc. Just because I could spend the time building software
that would likely be better and cheaper than what we are using doesn't
mean I should. My time is better spent building our business. Network
gear, radio gear, software, etc are all just means to an end. We are in
the business of selling a service; not building products.
-Matt
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