How Will Cisco and Juniper Respond to AT&T's Challenge?

AT&T just notified the rest of the telecom industry that the OEM business model has collapsed: The outdated vertically integrated proprietary OEM business model needs to be replaced with a fully disaggregated and modular white box model. AT&T identifies at least three new "ownership options" in this new model. In case OEMs suspect this is merely a negotiating position, AT&T also purchased much of Vyatta from Brocade.

Part 1. For each ownership option, describe the implications for various technology vendors participating in the new white box ecosystem if AT&T and other telcos implement the respective option. What value chain integration options can each vendor pursue and how can the vendor build a viable business model?

Part 2. Identify potential strategic choices for incumbent OEMs such as Cisco and Juniper.  How and where can they disaggregate to address AT&T's concerns while retaining or gaining key competitive advantages?

This is one of several optional topics in Cloud Computing. We discuss these and related questions as long as there is sufficient student participation from the relevant constituencies (including Cisco and Juniper) to create a compelling and lively in-class debate.  For a preview in 140 characters or less, follow @StrategyTMT