Report: Juniper Still Gaining On Cisco

Juniper Networks Inc. (Nasdaq: JNPR) increased its share of the core router market last quarter, while Cisco Systems Inc. (Nasdaq: CSCO) lost share proportionally. So says the latest report on WAN routers from The Dell'Oro Group.

The firm's figures highlight a trend toward Juniper gaining on Cisco in this market -- a trend that's continued all year (see Juniper Eats Into Cisco's Lunch). Dell'Oro's figures also illustrate a segment marked by enormous growth and fierce competition -- one in which neither Cisco nor Juniper is assured of future dominance.

According to Dell'Oro, Cisco's share of the total market for core routers -- represented by sales of its GSR 12000 series -- slipped from 69 to 65 percent during the period from the third to fourth quarters of 2000. In contrast, Juniper's sales of its M160, M40, and M20 routers rose from 30 to 34 percent in the same period.

Still, Cisco's hardly hurting. The overall core router market for 2000 was $2.4 billion, Dell'Oro says, and Cisco enjoyed a 71 percent slice of the pie, compared to 28 percent for Juniper.

In the last quarter of 1999, the overall market for core routers totalled $270.2 million, of which Cisco owned 78 percent and Juniper just 17 percent. A year later, the overall market was valued at $836 million in the same quarter, and Cisco's share has dropped by 13 points while Juniper's has increased by 17 points.

Meantime, Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7) has crept into the picture. That vendor's sales of its Terabit Switch Router grew from a third-quarter total of $4.4 million to $8.8 million in the fourth quarter 2000. Avici now holds one percent market share.

Some industry sources dispute Dell'Oro's figures. For one thing, folk aren't convinced that comparing only Cisco's GSR 12000 series, and not its other high-end routers, against the Juniper M160, M40, and M20 is valid. That is because the 12000 is generally considered strictly a core switch, while the M20 mainly occupies the network edge.

Dell'Oro admits that it needs to revise its taxonomy. Until now, the firm has put all core routers into a category called "WAN Core and Edge Routers," reflecting its perception that high-end routers are used in both backbone and edge networking applications. Now, as the market segments become more clearly delineated and a new breed of smaller routers emerges solely for the network edge, Dell'Oro admits it's time for a new tack.

"We hope to have new categories in next quarter's report," a spokesperson says. Still, it remains to be seen whether the new cut will satisfy those who clamor for a closer comparison of like to like in Cisco's and Juniper's product lines.

Another sticking point for many is that Dell'Oro includes revenues from service and support in its Juniper figures, but not in those for Cisco. The firm says this is because it takes revenue figures directly from vendors, and in Cisco's case those figures do not include service and support.

Still, Dell'Oro feels the comparison is valid. "We estimate that service and support would add 5 to 10 percent more to Cisco's figures," a spokeswoman for Dell'Oro says. "But that wouldn't change the trend. The numbers still tell the right story."

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

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