Juniper to invite Cisco to 'Pepsi' challenge

Last week, Stephen Kamman, an equities analyst for CIBC World Markets, published a research note about the new router, code-named Pepsi. Cisco, which dominates the market with more than 90 percent market share, is believed to be the "Coke" to Juniper's "Pepsi."

Details of the new router are scarce, but Kamman said he would not be surprised to see Juniper adding security features from NetScreen Technologies into the router that will connect corporate networks to carrier networks. These features would likely include a firewall and virtual private networking. Juniper announced last month that it is buying Netscreen, a well-established security appliance vendor, in a deal valued at $3.4 billion.

Kamman was unsure of a release date for the router. Juniper declined to comment on the product.

Cisco currently dominates the wide area network (WAN) router market with its 2600 router. Market research firm Dell 'Oro estimated the total market is $1.26 billion a year.

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WAN access routers sit on a customer's network and provide access to the Internet and other wide area services. The bulk of these devices are sold through the carriers, which offer them to customers as part of their data networking or Internet services. Cisco recently announced it added features to the 2600 to better support voice over Internet Protocol (VoIP).

Cisco's strength in this market comes from its close ties to the carrier resellers, Kamman said. Cisco also is known as a key provider of IP products. Its high-end routers are used in almost every carrier's network to shuttle traffic across the Internet.

Like Cisco, Juniper also sells high-end routers to carriers. In fact, the company has built its business over the past six years by marketing itself as a Cisco alternative. Now, with the addition of the NetScreen product line and sales force, Juniper has relationships with carrier resellers that serve the corporate side of the business.

Cisco's 2600 is technologically not an advanced device, Kamman said. He believes that Juniper has the engineering expertise to easily build a box to compete with the 2600. But up to this point, it has lacked a sales channel and a focus on this market.

"For Juniper, the challenge hasn't been in building a new low-end platform for WAN access," Kamman said in an interview. "It's been the distribution channel. Six months ago, I would have said that this move wouldn't have made sense for Juniper, but now with the NetScreen acquisition it makes perfect sense."

Cisco declined to comment.