Facing what some analysts believe to be the fiercest foe in its history, Cisco plans to introduce new technology Wednesday to combat a distinct speed advantage in Internet networking equipment from Juniper, a company that went public in 1999.
Cisco once dominated the Internet routing business, standing alone as the primary supplier of such technology to Internet service providers and large companies. But the company now has stiff competition in Juniper, a company that has taken key customer accounts from the networking titan and shrunk its once impregnable market share to roughly 65 percent. At stake are billions of dollars in equipment spending as telecommunications network operators continue to morph their networks to handle Net traffic.
"If you look at how they dominated markets in the past, Cisco has never really been beaten at its own game," said Curtis Price, program director at industry consultants Stratecast Partners. "Juniper represents an alternative."
Juniper has captured about 30 percent of the routing market, according to the latest figures from the Dell'Oro Group. Investment bank UBS Warburg predicts Juniper will reach 40 percent market share in core routing going forward.
As a result, Cisco shipped new routing devices capable of sending Internet traffic at rates of 10 gigabits per second, four times its previous capacity. The devices use interfaces known as "OC-192"--the latest speed barrier for networks. Customers using the new technology--dubbed the Cisco 12410 and 12416--include Sprint, AOL Time Warner and AT&T.
"Cisco had to do this," said Deb Mielke, principal analyst with Trelliage Network Strategies. "This is a core business to Cisco."
Some analysts and industry executives believe that Juniper has already cracked open the market for good, allowing other competitors to move into Cisco's territory. Thus, there won't be a return to the days when Cisco was the only game in town, given the presence of another market entrant, Avici Systems, and with others such as Pluris and Procket Networks on the way.
"Now people don't expect it to
But Cisco executives claim the new routers feed into a strategic thrust at the company to marry the Internet, or IP technology, with optical-networking technology. Thus, Cisco brings more to the table than niche players such as Juniper, they claim.
"I think this helps reinvigorate our already majority market share in the Internet core," said Larry Lang, vice president of marketing for Cisco's service provider line of business. "It's going to be a good flagship product for the whole industry."
Certain niches in networking remain hot, even as expectations of a slowdown in capital spending by telecommunications network operators continue to take hold. Internet routing is one such market, given the continued need to change the underlying systems that shuttle voice and Internet traffic around the globe to new technology.
Thus, stiff battles for customer sales only help the cause of telecommunications companies. "Competition is very good for us," said Bill Leighton, vice president of IP services and network development at AT&T Labs.
Blow by blow
As such, the stakes continue to be high for Cisco and competitors. The high-end routing market alone is expected to reach $12 billion by 2003, according to market researcher RHK.
A Juniper spokesman claims the new Cisco effort recalls technology first promised in December of 1999 and says the company has "a distinct advantage" over Cisco given its head start in the OC-192 market with customers such as Qwest Communications International and Genuity.
"We've learned over the past two years what it takes to be in this market," said Adam Stein, director of corporate marketing for Juniper. "The competitive stuff is a red herring, if you will."
In a recent interview, Juniper Chief Executive Scott Kriens suggested his company was on track to remain a significant force in the industry. "Our mission of building our franchise is still intact," Kriens said. "We've put ourselves in a position where we control our own destiny."
As part of Cisco's strategy, the company will also disclose Wednesday new technology based on its highly successful Cerent acquisition intended for smaller telecommunications companies.