Cisco sees momentum in sales of key router

Cisco also announced a joint development and reseller relationship with Fujitsu. The two companies will work together on Cisco's new XR software to develop high-reliability features for Cisco's core-routing portfolio. They will also coordinate their product lines in other routing and switching areas.

The stakes for the success of the CRS-1 product family are high. For the past year, Cisco has steadily been losing market share in the core-router market--valued around $1.5 billion in 2004--to rival Juniper Networks. Juniper introduced its next-generation core router, the T-640, more than two years ago. Cisco has pinned its hopes to recover this lost ground on the new CRS-1.

Cisco announced the CRS-1 in May. The router, which uses new software, offers 640 gigabits per second of switching capacity. The company claims that up to 72 CRS-1s can be hooked together to create a 92-terabits-per-second router. Due to long testing cycles, the CRS-1 has only just started shipping, but Cisco executives say momentum is building faster than they had expected.

"It looks like we gained some market share in the current quarter already," said Mike Volpi, senior vice president and general manager of the routing technology group at Cisco. "For the first quarter, which ended in October, the shipments for the CRS-1 beat our goals. And we are ahead of plan again for the second quarter."

Cisco now claims that it has six paying customers for the CRS-1. On Sunday it named four of them: Softbank BB, an Internet service provider in Japan; Telecom Italia; the National Institute of Informatics' SuperSINET, a research network in Japan; and the Pittsburgh Supercomputing Center. These customers are in addition to the more than 14 others that are in various stages of trials with the CRS-1, Volpi said.

Thinking small
On Sunday, Cisco also announced a smaller version of the original CRS-1. The mini-CRS-1 offers all the same features and functionality of the original at half the size. Instead of 16 slots, it has eight. Like the bigger version, the eight-slot chassis supports the new IOS XR operating software and all of the original routing line cards, including the new 40 gigabits-per-second optical interface card, when it becomes available. And since it is half the size, it also offers half the switching capacity, 320 gbps. The eight-slot version of the CRS-1 is available now, starting at $225,000.

The introduction of the smaller version of the product comes as no surprise. Cisco is following a similar path as its competitors. Both Avici Systems and Juniper Networks, which also sell high-capacity, scalable core routers, introduced smaller versions of their products after the original versions.

Volpi said most carriers don't need all the ports of the 16-slot chassis. But since they still require high-speed packet forwarding and core services, a compact version of the core router is a perfect fit.

"Smaller devices can fit better into the physical environment of a carrier," he said. "Just about every carrier can find half a rack for one of these. We'll probably end up selling more of the little guy than the bigger one. It's just a bigger addressable market."

Fujitsu on board
In addition to the customer and product news, Cisco also announced a joint development and reseller relationship with Fujitsu.

Fujitsu plans to resell all of Cisco's routing equipment. The alliance will initially focus on the Japanese market. The relationship will likely help Cisco and Fujitsu compete more effectively in the core-router market in Japan against local competitors Hitachi and NEC, which also have a joint-development relationship.