The Technology Case, Part III

On Wednesday, we assessed Cisco’s optical strategy, especially in regards to long-haul vs. metro optical. We concluded that the company may be rethinking its participation in long-haul optical. Cisco may also have some reworking to do on a specific edge router platform.

On Wednesday, we assessed Cisco’s optical strategy, especially in regards to long-haul vs. metro optical. We concluded that the company may be rethinking its participation in long-haul optical.

Cisco may also have some reworking to do on a specific edge router platform. Though Cisco’s market share in service provider edge and core routers is enviable – 70% of a $2.8 billion 2002 market, according to Synergy Research – the company’s 10000 series Edge Services Router (ESR) may not be a competitive product in its target applications – broadband and low-speed T-1/E-1 aggregation, analysts say.

 “As far as the 10000 is concerned, Cisco still has some convincing of the marketplace [to do] as to where that product is positioned and how that product is going to achieve a greater penetration rate in Tier-1 carriers,” says Mark Bieberich of The Yankee Group. “Is it going to be in broadband aggregation? Is it going to be in low-speed T-1/E-1 aggregation? Do they have the right product? The market isn’t convinced of that, and I don’t think carriers are convinced of that. I still think they have some improving to do on the 10000 series.”

Cisco Service Provider CTO Roland Acra says the 10000 series is targeted mostly at broadband aggregation, especially at cable modem termination system (CMTS) applications. A lot of Cisco’s newer CMTS introductions have been based on the 10000 series, as will future introductions, he says. Acra also claims that the 10000 is “unmatched in the industry” when it comes to T-1 and sub-T-1 aggregation.

BellSouth is a believer. The regional Bell operating company said its BellSouth Regional IP Backbone (BRIB) has Cisco 10000 series routers performing aggregation at the edge for a core built with Juniper Networks T640 and M160 routers.

Meanwhile, Cisco continues to add high-speed edge capabilities to its 12000 series core router – which BellSouth is also using for BRIB edge aggregation – and position its 7600 series as the platform upgrade for the eight-year-old and widely-installed 7500 series.

In core routers, Cisco’s share in the fourth quarter of 2002 slid by 7.2%, to 73% of the overall core router market, Synergy says. Cisco raised its share to 74.1% in the first quarter of 2003, however, according to Synergy.

Meanwhile, rival Juniper saw its core router revenue climb nearly 40% in the fourth quarter of 2002, accompanied by a significant take-back in market share from Cisco. Juniper raised its core router market share 7.2%, to 24.8%, in the fourth quarter of 2002, according to Synergy.

Juniper’s gain may be attributable to the unveiling of its T640 core router last year, which boasts terabit-level scalability, support for 40G bit/sec per slot, and a five-to-seven-year product lifespan, among other features. Meanwhile, Cisco’s 12000 series router line is four years old, and the latest member is two years old.

After Cisco unveiled the 12400 line in early 2001, Juniper began losing share to Cisco. Now it has gained some back as the industry awaits Cisco’s new core offering, which may come later this year, as Acra says a major 12000 series upgrade occurs every two years.

“No doubt about it, the Cisco 12000 series is long in the tooth,” says Joe McGarvey, an analyst at Current Analysis. “However, Cisco is really smart about upgrading technology at the right time. There’s not really a big demand for the large terabit-class switches that were introduced a couple of years ago. I don’t think Cisco is holding off on a multi-chassis successor to the 12000 because it is struggling with the technology. I think it is just holding off until customers demand it.”

Next week: IOS, a blessing and a curse.