The effects of last month's deal between Cisco Systems and IBM has already begun to trickle down, whereby Equant Network Services is anxious that the new alliance may present worrying repercussions to its own partnership with Cisco.
The IBM and Cisco alliance poses two possible scenarios for Equant: IBM can become a fierce competitor to Equant, or a great business partner, according to B G Padfield, managing director and vice president, Equant Asia-Pacific Australasia, who only learnt of the IBM-Cisco alliance when it was publicly announced.
IBM, with its sheer size and proven business strategies, could demonstrate itself to be a formidable competitor, Padfield said, noting that Big Blue's alliance with Cisco could pose a serious challenge to Equant's existing relationship with the networking giant. Cisco is Equant's single largest partner for its integration services division.
But IBM does not have the full set of Cisco skills yet, and it would, therefore, make more sense for the vendor to establish a partnership with Equant, he noted, adding that his company could bring forward experience, expertise and global coverage support for Cisco's products.
When contacted, IBM's Singapore office declined comment on this issue.
Establishing a partnership, however, may not necessarily always be the best way to succeed, according to Akhil Agarwal, Asia-Pacific senior market analyst, data communications research at IDC.
Agarwal offered another alternative, saying that it might make better sense for Equant and IBM to "find their own space, and serve their own customer base" rather than to compete with each other head-on.
"There is scope in the market for companies like them to find their own strengths and niches," he explained. "So they need not be direct competitors, and need not have to cannibalise each other's services." And while there will probably be a few projects where these two companies could end up bidding against each other, each will still have its own strengths, he said.
IBM is exceptionally strong in the manufacturing, and banking and finance segments, and has extensive experience in selling networking products, he said.
While Equant is still relatively new in the corporate sector such as banking and telecommunications, its strengths may lie in other market segments, notably the aviation industry, Agarwal added.
"Just as IBM has its key strengths, and loyal customer base, so does Equant. And they can both continue to serve those markets without going head-on into each other," he said.
Ironically, though, Equant does not intrinsically believe in forming alliances.
One of the company's key differentiators is its ability to offer a single, seamless IP-based network across the world, without any reliance on alliances, said Andrew Bond-Webster, president, Equant Network Services Asia-Pacific.
Bond-Webster noted that a company's independence is vital to customers, because with any alliances comes the likelihood of a breakdown in communication between the partners, which could translate into bad news for the clients.
Engaging services from a party of multiple partners means service-level agreements are harder to meet, because there is no end-to-end control of the network architecture, he explained. While he acknowledged that forming alliances could yield a range of benefits, including the acquisition of customer base and knowledge of local markets, these are advantages that Equant already has, he said.
From a strategic point of view, companies form alliances to expand their global reach, especially if they come from and only have presence in domestic markets, Bond-Webster explained. But due to its history in the aviation industry, Equant is already global and has the local market knowledge and expertise, where "our customer has been global from day one", he said.
He admitted that Equant might lack a large customer base, and recognised the need for the company to focus on developing "sales relationships". But while Equant is keen to develop partnerships to enhance its sales strategy, the vendor remains firm on steering clear from alliances involving its products and services, he said.
"We won't compromise our network infrastructure, and we won't dilute it," Bond-Webster said.