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Can Redback Come Back?

Light Reading
News Analysis
Light Reading
10/30/2001

Redback Networks Inc. (Nasdaq: RBAK) saw its stock pop yesterday, as it announced the new SmartEdge 800 Edge Router (see Redback Unveils Edge Router). Wall Street was expecting the new product, but it was encouraged by the fact that the SmartEdge 800 is already generating revenue from three of its 15 trial customers.

Redback wouldn’t comment on specifics about the customers, but the news was enough to boost the stock up 0.37 (9.59%) to finish at 4.23.

The company has had a tumultuous year. Its stock has dropped from a high of almost $200 a share to roughly $4 today (see Redback Melts Down). Its original management has all but disappeared (see Another Redback Resignation). It has steadily reported declining revenues (see Redback's Rough Road). And it has lost the lead it once held in the subscriber management system (SMS) market to companies like Unisphere Networks Inc. (Nasdaq: UNSP) and Cisco Systems Inc. (Nasdaq: CSCO).

According to data from Infonetics Research Inc., Redback garnered 37 percent market share in the SMS market in the fourth quarter of 2000. By the second quarter of 2001, that percentage had fallen sharply to 23 percent. Cisco had about 41 percent market share in Q4 2000, and it saw its marketshare drop to 39 percent in Q2 2001. Unisphere, with its ERX platform, increased marketshare from 8 percent in Q4 2000 to 27 percent in Q2 2001.

But Redback is not ready to give up. And after months of silence on the product front, it finally has some new gear. It is attempting to make a turnaround with a new management team and a new product focus: the edge router market (see DeNuccio Joins Redback).

Georges Antoun, senior vice president of marketing for Redback, says that with the introduction of the new SmartEdge router and enhancements to existing products, the company will increase its addressable market to $2.7 billion next year from $900 million this year. Analysts predict Redback will hit between $240 million and $280 million in revenues next year.

But entering the edge router market may be easier said than done. Cisco currently owns that market with 66 percent share. It has a full suite of products from the lower-end 7500 routers to the newly revamped GSR line to fill edge aggregation needs.

Redback executives claim that the SmartEdge 800 beats Cisco's products on port density as well as software flexibility. This would make the SmartEdge a more economical and long-lasting product choice for service providers.

Density may be the best way to compete. Kevin Mitchell an analyst with market research firm Infonetics, says a recent study found that roughly 45 percent of 75 tier-two service providers in the United States and Canada say that density was the most important feature of an edge routing platform.

So how does Redback stack up on its claims of offering the highest density? Compared to Cisco's 12410, Juniper’s M20, Riverstone’s RS 8000, and Unisphere’s ERX1400, Redback’s SmartEdge 800 wins the port density argument for DS3 through OC48 interfaces (Riverstone and Unisphere don’t offer OC48 interfaces). But Cisco appears to beat Redback in almost every category with its newer and denser product the 12404. The only area where it doesn't beat its competitor is in OC12 density, where Redback offers 192 OC12 ports and Cisco offers 92 ports of OC12 per seven foot rack.

Table 1: Who's Denser?

Company DS-3* OC-3* OC-12* OC-48* GigE*
Cisco 12404 1152 384 96 96 240
Cisco 12410 192 256 64 64 160
Juniper M20 320 320 80 20 80
Redback SmartEdge 800 480 384 192 48 192
Riverstone RS8000 128 252 126 NA 126
Unisphere ERX 1400 432 144 36 NA 432
*Port counts are per 7-foot telco rack


While this is an important feature to address, even Redback agrees that port density can change with the introduction of new line cards.

“There will always be new additions to hardware that could surpass our density,” says Ravi Chandra, vice president of IP software for Redback. "But the biggest difference is in the software architecture. We are able to deliver a modular software architecture that Cisco is not able to deliver.”

Unlike Cisco’s IOS routing software, Redback’s software has been designed so that each of its routing protocols can be loaded separately. This is important because it allows the device to continue forwarding packets even when a piece of its software has been damaged. Cisco’s IOS can only be updated in one big chunk. Chandra, who used to work on the Cisco’s GSR products, says that if part of the IOS software breaks, the entire box goes down.

But is this feature enough to win a place in an already crowded market?

Some analysts say the company could have a shot, if it is able to exploit its existing SMS customer base.

"If they can leverage existing SMS customers and use those doors there to open doors for the SmartEdge product line, they have a good chance of taking some market share," says Infonetics' Mitchell. "They already sell to a lot of tier-one service providers."

Mitchell is still concerned that the SmartEdge 800 hasn’t gone far enough in terms of innovation. He says he expected Redback to include subscriber management in the product, putting it more firmly up against Unisphere. Cisco, which also has separate products for edge aggregation and edge routing, has already introduced at least one product that marries the two functions.

"In the long run, I think it will hurt them not to include subscriber management in the box,” says Mitchell. “I think the market is moving toward collapsed integration of these two features at the edge.”

— Marguerite Reardon and Phil Harvey, Senior Editors, Light Reading
http://www.lightreading.com
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bluemtn
bluemtn
12/4/2012 | 7:39:22 PM
re: Can Redback Come Back?
RBAK was comparing the SE 800 to Cico's 12410, 1008, and verbaly to the 7500... as well as JNPR's M20. They showed the that the SE 800 had a higher rack density for everything but OC-48...

IS the 12404 the LR is comparing to a more aplicable comp?

dpugh
dpugh
12/4/2012 | 7:39:21 PM
re: Can Redback Come Back?
Depends on if you need uplink trunks.
Marguerite Reardon
Marguerite Reardon
12/4/2012 | 7:39:20 PM
re: Can Redback Come Back?
The 12404 is Cisco's newest, latest and greatest edge router. If density is what is important, it doesn't seem fair to compare Cisco's older 7500 with the new Redback product since Cisco has made a lot of improvements by adding new routers to its product portfolio.
abcxyz
abcxyz
12/4/2012 | 7:39:20 PM
re: Can Redback Come Back?
1)am surprised there is no comparision for DS1 ports on *EDGE* router?
DS1 is a very common aggregaing port on the edge routers..
2)the DS3 port calculation is inaccurate for SmartEdge 800..
from the data sheet on Redback's web site:
DS3 ports should be 1152.

http://a848.g.akamai.net/7/848...
dietaryfiber
dietaryfiber
12/4/2012 | 7:39:20 PM
re: Can Redback Come Back?
There should be a couple of caveats around all of this:

1 - People could implement a Channelized DS3 as a way of dealing with many DS1 feeders. This might be cheaper per bandwidth than a direct T-1 card. Connectorization may limit the number of T-1s exiting a slot.

2 - Do the numbers per 7' rack meet the NEBS (GR-1089-CORE) heat loading requirements? If not, then it may be difficult to put these products in a co-location cage at the densities listed. These may end up being theoretical numbers instead of deployed numbers.

dietary fiber
amnesiac
amnesiac
12/4/2012 | 7:39:19 PM
re: Can Redback Come Back?
2 issues about this article that probably need to be corrected:
- 12404 numbers assume that only one GRP is needed. If redudancy is required, the density numbers would have to drop by 1/3. Since the SE-800 has redudancy at the quoted numbers... this is an incomplete/unfair comparison.
- you DS3 numbers on the SE-800 are incorrect, they should be 1152.
bluemtn
bluemtn
12/4/2012 | 7:39:19 PM
re: Can Redback Come Back?
the CSCO 12410 has 10 slots... the RBAK SE 800 has slots for 12 line cards
bluemtn
bluemtn
12/4/2012 | 7:39:19 PM
re: Can Redback Come Back?
Thy compare to the 12410 in their presentation... look at slide 26 on this link.

http://www.redback.com/en-US/f...

are all the 124XX routers more or less the same? just a question of matching the right size for the job???, The 12404 probably doesn't have as much flexability as there a only 4 slots...the 12410 and the SE 800 each have 10 slots.

So who is right on this? is the lightreading data in error, or is RBAK jerking us around?, as some posts have said, is the 12404 a beter comp than the 12410?

I'd think that the best comp would be the 12410 as they both have 12 slots...in which case RBAK appears to have a great product if you belive their numbers.

LR - can you guys add some clearity on this?
abcxyz
abcxyz
12/4/2012 | 7:39:19 PM
re: Can Redback Come Back?
1) I do not see this comparision(DS3s that are channelised) either. The ports used in comparision are unchannelised DS3s.

2)Are you saying the DS3 card on SmartEdge 800 not compliant with NEBS(GR-1089-CORE) and all the other cards on SE800 and other cards on all other vendors are compliant?

metroman
metroman
12/4/2012 | 7:39:14 PM
re: Can Redback Come Back?
You are getting sucked into the hype!

Who cares what the marketeers say about a product that has loads of ports in a NEBS compliant rack if you don't have hardware to ship or the functionality to deliver value added services?

I have never seen a new product introduction that matched the marketing with the reality. Logic suggests that if you are trying to build a modular OS while deploying DS3, OC3, OC12, OC48 and Gig Ethernet hardware you are taking on a massive development project. They are suggesting through marketing that all these things are delivered today in a stable, reliable platform. I have never seen it and I never will. The reason is market forces.

So can anyone tell me what is really shipping TODAY? What functionality can it provide TODAY? Does it do ISIS TODAY? Does it do MPLS, and in what flavors TODAY? What BGP attibutes does it support TODAY? What accounting capabilitites does it have TODAY? etc etc etc.....

Today is what counts not what the marketeers promise in the next release (or 5)!

Metroman
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