Shares of data networking companies, including Cisco Systems Inc, tumbled after a media report that Amazon.com Inc’s cloud unit might begin selling its own switching devices.
Amazon Web Service’s (AWS) plan to enter the US$14 billion global market for the equipment that helps shepherd traffic around networks, signals the company might become more entrenched in the enterprise computing marketplace, the Information reported, citing a person with knowledge of the discussions.
It would pose a formidable challenge to existing players, including Juniper Networks Inc and Arista Networks Inc, because AWS would price the so-called white-box switches from 70 to 80 percent less than compatible ones from Cisco, the Web site reported.
Cisco relies on hardware for more than half of its revenue, and switches and routers comprise the two biggest hardware products.
Its shares on Friday fell as much as 6.1 percent to US$40.94 in New York.
Juniper Networks fell as much as 3.9 percent to US$27.40, and Arista slipped as much as 6.2 percent to US$261.16.
Every time Amazon makes a move into a new industry, those companies’ stocks shudder as the market considers the consequences on market share and pricing power.
Shares of drugstore companies, including Walgreens Boots Alliance Inc and CVS Health Corp, sank nearly 9 percent on news late last month that Amazon was acquiring prescription drug delivery company PillPack.
Shares of grocers, such as Kroger Co, plunged when Amazon acquired Whole Foods Market Inc for more than US$13 billion in June last year.
Amazon did not immediately respond to requests for comment.
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