The technology speeds up Avici's high-end router, helping telecommunications carriers and Internet service providers build faster networks. Routers direct Net traffic over a network at high speeds. Avici's latest product is intended to compete against Cisco and Juniper, two stalwarts in the lucrative high-end router market.
Avici, a start-up that went public last summer, is fighting for a piece of a market that is expected to grow from $4.5 billion in 2001 to $12.7 billion 2003, according to market research company RHK. Cisco and Juniper dominate the market, with Cisco capturing 69 percent of sales and Juniper nabbing 30 percent during the 2000 third quarter, according to market research firm Dell'Oro Group.
Avici, which has less than 1 percent of the market, is one of many new companies hoping to follow Juniper's lead and capture a piece of the action. Alcatel, Lucent Technologies, Marconi Systems and others are also developing their own high-speed routers.
While Cisco has maintained its dominance in the overall network equipment market, smaller players, such as Juniper and Foundry Networks, have managed to find niche markets where they can be successful. The intense demand for new high-speed Internet connections, wireless communications and mobile data, optical networking, and secure virtual private network (VPN) equipment has created opportunities for dozens of start-up communications equipment makers in recent years.
These new companies, including Redback Networks, Extreme Networks and Sycamore Networks, among many others, have provided new competition to the established networking players, such as Cisco, Nortel Networks and Lucent Technologies.
On Monday, Avici announced new interface cards, including one based on newer fiber-optic technology called OC-192 that delivers data at speeds of 10 gigabits per second. Carriers have begun upgrading to OC-192 speeds to ease network congestion, said analyst Dave Passmore, of The Burton Group.
Avici executives tout the company's new technology as faster and more powerful than that of competitors. Passmore said Avici's new product makes it technologically competitive.
Avici, whose shares have traded at a 52-week high of $174.50, dropped to about $19 after it announced a wider-than-expected third-quarter loss in October. The company announced it lost $23.6 million, or 70 cents a share, on revenue of $4.36 million. Analysts had expected a loss of 41 cents per share, according to a poll of analysts conducted by First Call.
Avici expects to release its fourth-quarter financial results Jan. 18.