Cisco’s loss is Juniper’s gain

The worldwide router market declined by as much as 32% in 2002, according to recently released market share data.

Perhaps the only router maker that’s not depressed is Juniper, which saw its core router revenue climb nearly 40% in the fourth quarter, accompanied by a significant take-back in market share from Cisco.

Synergy Research states that the worldwide market for routers dropped from $9.6 billion in 2001 to $6.6 billion in 2002, a decline of 32%. Meanwhile, Dell’Oro Group says the market fell 15%, to $6.1 billion in 2002 from $7.2 billion in 2001.

Dell’Oro cites the slowdown in service provider spending as the culprit behind the year-over-year decrease. Dell’Oro says that capital spending on wireline infrastructure fell 35% last year.

According to Synergy, the worldwide market for service provider edge and core routers dropped from $4.3 billion in 2001 to $2.8 billion in 2002, a decrease of 35%. Cisco’s share of this market rose from 64.6% to 70%, while rival Juniper’s dropped to 16.3% from 20.1% in that time, according to Synergy.

On a quarterly basis, Cisco’s share dropped from 72.9% in the third quarter of 2002 to 69.6% in the fourth quarter, while Juniper’s share rose from 19.7% to 20.8%. But Juniper made more significant and dramatic gains in the core.

Juniper increased its core revenue by 39.9% in the fourth quarter, to $71.6 million. Cisco’s revenue dropped 9.4%, to $211 million, according to Synergy.

Juniper also raised its core router market share 7.2%, to 24.8%. Dell’Oro found that Juniper increased its fourth-quarter share by five percentage points to 25%.

Juniper appears to have taken share directly from Cisco, as Cisco’s share in the fourth quarter slid by 7.2%, to 73% of the overall core router market, Synergy says.

Juniper unveiled its T640 core router last year. The product is installed at BellSouth, NTT/Verio and China Telecom, among others.

Cisco is rumored to be developing its next-generation 12000 series core routers. The 12000 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. Apparently, staggered product cycles help determine who gains or loses share quarter to quarter.

The overall core router market was $289 million in the fourth quarter, about flat with the third quarter. In 2002, the core router market was $1.2 billion, down more than half from 2001’s $2.5 billion market, according to Synergy.

In the core, Avici stayed flat at 2.2% quarter-to-quarter, while its year-over-year share advanced to 2.4% from 2.2%. In edge routers, Redback’s share fell to 1.6% from 3.3% between the third and fourth quarters, while its year-over-year share went from 2.2% to 4.6%, according to Synergy.

The overall edge and core router market decreased 1% from the third to the fourth quarter, from $640 million to $632 million, Synergy found.