Cisco Systems Inc. (Nasdaq: CSCO) announced the 7301 router today, the latest product in its high-end access router series (see Cisco Intros 7301 Edge Router).

This new product uses a hardware accelerated design to provide three ports of Gigabit Ethernet in a one-rack-unit-high box. But more imporantly, Cisco looks to be packing more features into its edge routers to handle a slew of new managed services from telecom carriers.

Specifically, the Cisco 7301 combines firewall, quality of service, and bandwidth management functions. Service providers will likely use the router as customer premises equipment (CPE) to sell managed security services. It can also be used for broadband aggregation. Using a function called network-based application recognition (NBAR), which offers the ability to inspect packets in detail, identify specific applications, and then tune the network performance for those applications, it can also validate service-level agreements and offer differentiated levels of services.

Overall, Cisco garners well over 80 percent of the enterprise router market. And it has nearly 100 percent marketshare in the high-end access market. Lucent Technologies Inc. (NYSE: LU) is the only company that has a product to compete against the 7301, according to Joel Conover, principal analyst of enterprise infrastructure at Current Analysis.

“Lucent really only started targeting this market about six months ago,” says Conover. “But Cisco has phenomenal mindshare among customers. Cisco is really the preferred choice, and Lucent is the challenger.”

Other companies like Adtran Inc. (Nasdaq: ADTN), Enterasys Networks Inc. (NYSE: ETS), and Nortel Networks Corp. (NYSE/Toronto: NT) compete against Cisco for low-end access business where price is more sensitive.With the capabilities on this box, the 7301 can easily handle enterprises using T3 connections and above. The price tag reflects these advanced functions. While the low-end Cisco 2600 lists for about $2,500, the Cisco 7301 costs $18,000.

— Marguerite Reardon, Senior Editor, Light Reading