Q&A: Cisco’s Mike Volpi discusses the edge router market

Cisco has been challenged of late in carrier edge routing, with overall revenue declining 17% and IP edge aggregation revenue dropping 25% in the third quarter of last year, according to Synergy Research. Yet the company is still the leading provider of edge routing and switching gear to all segments of the market. As the industry convenes this week at the TelecomNext conference in Las Vegas, Mike Volpi, Cisco’s senior vice president and general manager of the company’s Routing and Service Provider Technology Group, took some time to discuss the edge router market with Network World Managing Editor Jim Duffy.

What’s happening in the edge to stimulate growth and create opportunity for other players?

The edge is seeing very positive phase of growth for a broad range of reasons. A market that is fragmented (like the edge) lends itself to new entrants, which focus on the different niches. We view the most important trend true convergence — devices which are able to aggregate both consumer and business traffic off of a single point of entry. Convergence in the sense of single devices that are capable of transporting traffic at fairly lower levels of Layer 2 connectivity, to also being able to apply fairly rich Layer 3 and/or Layer 4 type services. And can also aggregate traditional forms of traffic such as VPN, frame relay, but also offer newer, more timely methodologies of connectivity, such as MPLS, VPLS, and so forth. I think that is the overarching theme and the one that’s creating the most long-term opportunity.

Within that umbrella, there are other important themes, two which I would highlight as stronger than perhaps the others: one is around video and IPTV; the other is aggregation of mobile broadband.

Does Cisco currently possess the portfolio of products to address this level of convergence or is that something under development?

I don’t think there’s any single vendor that has the solution for every single market. The requirements of the various edge markets are so broad that, at least today, most of the products in the market are more optimized for any given application and any particular service. There isn’t one well suited for everything. I believe we have edged close to a most well rounded product offering in the market. I feel there’s always work to do from an engineering and technology perspective. But I feel like our position in the market is pretty strong. And I think that’s reflected in the global market share numbers.

We’re obviously always working on a number of different types of technologies. We’re doing both (new product development and existing product enhancement).

What are your strategies for regaining lost market share in the edge?

In part, we’d like to regain market share based on winning specific transactions. There are bids that represent big market share gains because the markets are not that big. I also think the numbers are somewhat skewed by the categorization of a certain suite of products that are not necessarily edge routers. So the net of it is the market is more competitive now than it used to be and it is hard to maintain the same kind of very high market share that we’ve had at the edge over the years. But I do think that we can regain back some of what we lost. It’ll take time because we have some very good competitors. But I think through a combination of winning some key deals, continuing to enhance the product portfolio that we have today, and at the right point in time introducing the next generation of products, I think we’ll be able to gradually regain our share.

How are Alcatel, Redback and Tellabs able to gain significant traction at the apparent expense of Cisco and Juniper?

Each company is positioned in a particular growth niche, which affords them especially because they have a smaller base, faster growth rates than the aggregate of the market. Alcatel positions themselves in IPTV very proactively in the partnership they have with Microsoft. Redback positions itself in broadband aggregation; their position in that segment is pretty much a pure play. Tellabs we don’t see as frequently as the other two. From an external point of view, their positioning is multiservice edge. These are important niches and I think both (Alcatel and Redback) have done a good job building products and positioning within those niches.

Does the age of your 7600 and 10000 series platforms cost you any deals?

I don’t think so. They generate quite a bit of revenue and incumbency for us. If you look at each product, while the model number of the product is the same, they’ve been enhanced several times since the introduction of the product. The 7600, for example, is on its third generation of supervisor (engines), its fourth generation of line cards, and the value proposition with the customer base is once you buy into that 7600 family, you have a life of upgrades you can live off of rather than a forklift to the next box. Which we think, ultimately, does render the platform more attractive to customers. If you look at the revenue generated and growth rates of the 7600, it’s actually quite comparable to the growth rate of a couple of the other companies we cited earlier. So the platform is doing quite well in its growth rate, and we are — obviously for both the 10000 series and 7600 series — working on a range of technology which will continue to enhance its scalability, number of users, number of connections, number of tunnels, as well as enhance its performance (in) packets per second, size of route tables. All of which will be coming the coming months, years, and so forth. We don’t view the platforms as aged because, while the number is still the same as it was, if you look inside it — the silicon technology, backplane, crossbar switch, interface types, speeds and feeds — those are all new. So we feel the platforms are amply competitive today.

What are your plans for refreshing those lines? Will next releases be based on IOS XR?

We do intend to take the IOS XR software base down…to other aspects of our product line. At this point, (7600 and 10000 lines) are under consideration but we haven’t made definitive plans around those.

Is it more likely that the 12000 XR router line will take on more of the 7600 and 10000 series capabilities?

The relevant point here is that IOS XR today is an extremely high-end, carrier-class platform. Much higher levels of availability and scalability than other software bases out today. But if you look at the feature set it is a core-oriented feature set, which means it doesn’t have — yet — a large number of the tunneling, (provider edge), broadband features. So our trajectory is more bounded by the feature functionality in IOS XR than the readiness or availability of the hardware platform. As we put more edge oriented features on IOS XR — MPLS PE, Layer 3 VPNs, BRAS — you’ll find that software platform migrating more and more toward the edge. It’s not really an issue of what hardware it runs on as much as it is the breadth of edge features that it has.

Do you find that the absence of operating system modularity on current edge platforms is a detriment?

No, I wouldn’t say that. First of all, the IOS software base is in fact modular. We introduced modularity into the market not too long ago, with the launch that we did on the Catalyst 6500. Modularity is not a feature; it’s a definition of an architecture. What customers ultimately care about are what features are on the platform. Many of those attributes — non-stop forwarding, in service software upgrades, stateful switchover — IOS does have. When we are challenged in the marketplace it tends to have more to do with issues around pricing or in some cases issues of scalability — how many sessions a particular platform aggregates for BRAS, for example. But we don’t see modularity issues. That doesn’t seem to be the one that comes up.

In addition to scalability and performance, can you be specific on any of the other enhancements planned for the 7600 and 10000 series routers?

Not too much at this point. We obviously can’t pre-announce products. But suffice it to say that in the coming months we have some pretty exciting announcements that we’d be happy to share at the right time with everybody.