Cisco's Gains Drain Riverbed

Cisco's (CSCO Quote) resurgence in data networking is starting to put the squeeze on smaller players.

A series of first-quarter sales warnings from outfits such as Web switchmaker Packeteer (PKTR Quote) and upstart network security shop Sourcefire (FIRE Quote) signals that competition in the business IT services sector is intensifying.

Analysts and investors say a big part of the blame rides on tech giant Cisco. The San Jose, Calif., networking gearmaker has been swinging its ample girth in such a way that jostled rivals are now steadily losing their footing.

"I talked to an industry executive about this recently," says Ovum IP infrastructure analyst Mark Seery. "He said, 'Everyone has 3% of the enterprise space, but no one has critical mass.' ...