Juniper Eats Into Cisco's Lunch

Light Reading
News Analysis
Light Reading
12/21/2000



Juniper Networks Inc. (Nasdaq: JNPR) isn't just nibbling away at Cisco's router market share any more. It's stuffing its face.

These are the indications of a report on the market for core and edge routers recently issued by The Dell'Oro Group. The research shows that Juniper's products claimed 29 percent of the $680.6 million in core and edge router revenue for the period of July through September, 2000 -- up from 22 percent of the market in the previous quarter, according to Dell'Oro.

In contrast, sales of equipment produced by Cisco Systems Inc. (Nasdaq: CSCO) accounted for 68 percent of the market, down from nearly 76 percent the quarter before.

Tracking Cisco and Juniper in the Worldwide Core and Edge Router Market The figures highlight a steady gain in Juniper's market share over the past year, compared with a trend downward in Cisco's.

Worldwide Core and Edge Router Market 4Q99 Worldwide Core and Edge Router Market: 3Q00 Dell'Oro president and founder Tam Dell'Oro points out that the firm's figures for Juniper include revenues from services and support, while Cisco's do not. The reason, she says, is that Dell'Oro tracks revenues exactly the way companies report them: "If they report sales along with support, we do too. If they break them out into separate categories, then so will we." Support typically accounts for 5 to 10 percent of total sales if a company reports them together, she says.

Nevertheless, Dell'Oro says that a strict apples to apples comparison of Cisco and Juniper figures would still reveal the same trends: "We could reduce Juniper's figures by five to ten percent, or increase Cisco's. Since we've been tracking the same types of numbers over time, it wouldn't change the trends," she says.

Dell'Oro is reluctant to speculate on the reasons for the trends, but says one factor may be Juniper's aggressive plan to open up new sales channels through partnerships with the likes of Nortel Networks Corp. (NYSE/Toronto: NT) and Ericsson AB (Nasdaq: ERICY) (see Juniper, Ericsson Enter Joint Venture).

"Cisco has a larger number of resellers, but Juniper may be expanding its channels at a faster rate," she says. Also, she points out that Juniper's still ramping up, ensuring that its growth will be faster than that of a more established player with lots of existing customers. "It's easier to grow sales by the million than the billion," she says.

Juniper also made inroads on the competitive front by being first to market with an OC192 interface. So far, Cisco does not have its OC192 hardware in general shipment for its GSR 12000 series.

Juniper may have work to do to keep its momentum up. Several companies also look to be gaining market share in the fractional "Others" category that Dell'Oro tracks. Among these are Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7), which Dell'Oro says claimed $4.4 million of the market in the most recent quarter, up from $2.2 million the quarter before. Avici has said it will offer OC192 links by year's end (see Avici Plays OC192 Card).

There are also a range of other vendors clamoring for a place: Among these are Alcatel SA (NYSE: ALA: Paris: CGEP:PA), NEC Corp. (Nasdaq: NIPNY), Pluris Inc., and Marconi Communications PLC (Nasdaq/London: MONI), which says it plans to release a switch/router in 2001 (see Marconi Unveils Big Switch/Router).

-- Mary Jander, senior editor, Light Reading http://www.lightreading.com

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