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Optical/IP

Core Routers: Bottoms Up?

At half its 2001 size, the market for service provider core routers has clearly shrunk to fit the economic downturn. But there are signs that an uptick may be in the offing.

That's the gist of the latest report on service provider routers and switches from market research firm Infonetics Research Inc. The report covers IP core routers designed for high-speed backbone networks, such as the 12000 and 12400 series from Cisco Systems Inc. (Nasdaq: CSCO); the M40, M160, T320, and T640 from Juniper Networks Inc. (Nasdaq: JNPR); the SSR and TSR products from Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7); and other gear that incorporates switch fabrics greater than 40 Gbit/s, along with MPLS (multiprotocol label switching) and at least four OC48 (2.5-Gbit/s) ports.

"We expect calendar year 2002 to be down 45 percent compared with 2001," says Infonetics directing analyst Kevin Mitchell. "But we expect minor growth in revenue to begin in the fourth quarter of 2002, with 2003 bringing a return to growth."

It remains to be seen how much growth we may expect. Service providers, having overestimated their bandwidth requirements during the boom era of 1999 to 2000, are bound to be more conservative in their buying plans next year. But Mitchell thinks they will start spending.

"RBOCs and cable companies have made it clear their IP network demand continues to grow by 100 percent annually," Mitchell says. He thinks this requirement will start carriers gradually adding next-generation distributing routing capabilities to their core networks fairly soon.

Still, the segment's taken a beating that's changed the parameters of the game for good. Over the past three quarters, worldwide revenues for service provider core routers have dropped 30 percent.

North America has been hit particularly hard, with revenue declining 51 percent, compared with a 45 percent drop in the Europe, Middle East, and Africa regions, and 22 percent in the Asia Pacific region, according to Mitchell.

There's also been a vendor shakeout, with at least one significant startup calling it quits and others struggling (see Pluris Shutdown Confirmed and Rotten at the Core? ). Cisco and Juniper continue to hold sway over the top two spots, with Avici taking a distant (and by most accounts precarious) third place.

None of this is surprising, as ongoing woes in core routing have been tracked by Infonetics and others for months now (see Optical Oracle: Core Incompetence? and Report: Core Router Market Falls 22%). Yet Mitchell thinks there may be some surprises in store as the market starts moving again. "I think there's room for maybe one more key player in this market," he says.

But he's not talking new startups. Instead, he suggests that large companies that been dipping a toe in the core market while maintaining other businesses -- such as Alcatel SA (NYSE: ALA; Paris: CGEP:PA), for example -- could now stand a chance of gaining traction. Alcatel, along with NEC Corp. (Nasdaq: NIPNY) and one or two other players, now accounts for a 4 percent share of the core routing market.

Overall, core routing represents about 40 percent of the overall service provider router market, according to Infonetics. Its decline compares unfavorably with the market for service provider edge routers, which Infonetics says has been holding steady, with $471.6 million in worldwide sales last quarter (see Pluris Shutdown Confirmed).

— Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com
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telekommie 12/4/2012 | 9:54:37 PM
re: Core Routers: Bottoms Up? Mary,

How did Infonetic's define a "Core Router"? Are we talking something down to a Cisco 7500 level or was this based on overall throughput, forwarding capabilities and offered interfaces? Something else?

It's good to know the ruler before believing in the measurement. "Core Router" gets thrown around quite a bit along with other terms such as "Carrier Class" :)

Thanks,

Telekommie
cpatriaw 12/4/2012 | 9:54:36 PM
re: Core Routers: Bottoms Up? I really curious when analyst is saying X while other analyst is saying A.

This guy here is saying SP is start spending again in Q402 and '03, but other analyst from NWFusion is saying no growth 'til 2008.

What's their methodology ?
Iipoed 12/4/2012 | 9:54:35 PM
re: Core Routers: Bottoms Up? those who can't be CEOs become VPs
Those who can't be VPs become Directors
Those who can't direct either go into marketing or become consultants

Those who can't consultant leave the industry

And those who just CAN'T become industry ANALYSTs
tomoko 12/4/2012 | 9:54:35 PM
re: Core Routers: Bottoms Up? Do you know Vivace Networks ?
They seems to have exceptional product features compared to Cisco, Juniper etc.. Even more, inexpensive.
www.vivacenetworks.com
Iipoed 12/4/2012 | 9:54:34 PM
re: Core Routers: Bottoms Up? yeah so does procket, f10, charlottes web, pluris, Avici. Problem is why would a customer buy from a startup and have to worry about explaining to management why they cannot get service, support, software upgrades because they ran out of VC funds. All the routers out there today have more features and performance than all but .09% of the customers will ever need.

Cisco, Juniper and to lesser extent Extreme and Foundry have loyal customers and it is extremely unlikely that Vivace and others have anything to offer other than insecurity.




















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fiber_r_us 12/4/2012 | 9:54:33 PM
re: Core Routers: Bottoms Up? Maybe the Vivace web site doesn't have all of the info, but the Vivace products don't appear to be routers at all. They appear to be layer-2 switching devices of some sort. Do the Vivace products support BGP? Do the products forward IP packets based on layer-3 forwarding tables based on IP prefixes derived from BGP/OSPF/IS-IS?
Mary Jander 12/4/2012 | 9:54:30 PM
re: Core Routers: Bottoms Up? Good question. I've attempted to answer it by adding a new paragraph to the story. See above.
telekommie 12/4/2012 | 9:54:29 PM
re: Core Routers: Bottoms Up? Mary,

Thanks for the update clarifying what "Core Router" meant in this article :)

Any idea on what the "Core Switch" market looks like? I'm curious about Core ATM/multiservice switches.

Also - a similar article on SONET and DWDM gear market trends would be great to see (you may already have something current, but since I'm still fortunate enough to remain employed I'm too occupied to check Lightreading more than a few times per week.)

Thanks again,

Telekommie
marionetteworks 12/4/2012 | 9:54:29 PM
re: Core Routers: Bottoms Up? Do the Vivace products support BGP? Do the products forward IP packets based on layer-3 forwarding tables based on IP prefixes derived from BGP/OSPF/IS-IS?

Yes. They support all of the above.
corolla 12/4/2012 | 9:54:28 PM
re: Core Routers: Bottoms Up? Anyone notice that Hyperchip is slowly falling off the press wagon. They have not been mentioned anywhere when it comes to core routers. No trials or customers given that they've promised a router 2 years ago. They will follow the Pluris route as the telecom consolidation intensifies. They are being kept alive by a government loan which was supposed to be used to manufacture their product - I guess it's hard to manufacture power point charts!
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