Enterprise IT Watch Blog

Dec 27 2010   2:50PM GMT

Niche networking companies: A good bet in 2010 and beyond

Michael Morisy Michael Morisy Profile: Michael Morisy

Think Cisco, HP and other blue chip mainstays were the winners in 2010’s IT industry? Think again. The Motley Fool’s Eric Bleeker took a look at the top 10 networking and electronic stocks in 2010, and the winners were smart, savvy and small. Small enough that if you don’t live and breathe networking and IT, you probably haven’t heard of them.

The year’s winner was Acme Packet, which does session border control for enterprise and telecom, saw a 400.3% return in 2010, a boost that accompanied the migration to all-IP networks. More familiar companies like Riverbed Technology and Radware also had boom years, as far as the stock prices were concerned.

What drove the high valuations? In 2010, the network mattered more than ever, and HP and Cisco’s feuding left ample opportunities for smaller players to get a chance to sell their message (or partner with a bigger player) as IT managers began sorting out the new landscape.

But 2011 could see this chaotic market calm down, as Bleeker writes:

In the past, major IT firms had largely left the networking space to its 800-pound gorilla, Cisco, to control. However, after Cisco’s decision to create a server system that competed directly with many of its partners, companies like Hewlett-Packard and Dell have increasingly cast an eye to their own networking solutions. Much the same as storage, we’re seeing some smaller companies creating very advanced technology to fill niches not covered by industry giants like Cisco and Juniper. Will the mega-cap tech companies stalking networking go on a buyout spree that’s similar to what was seen in storage last year? I wouldn’t rule out a laundry list of buyouts across networking in 2011.

Michael Morisy is the editorial director for ITKnowledgeExchange. He can be followed on Twitter or you can reach him at Michael@ITKnowledgeExchange.com.

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