Speed Key in Juniper's MFN Deal
While the financials particulars were not disclosed, it doesn’t take a mathematician to figure out that, at an estimated $300,000 per router, the deal translates into some pretty hefty change for Juniper.
"This is a huge deal," says Raj Mehta, senior analyst with RHK. "Juniper is still enjoying their time in the lead. They’re the only ones shipping OC192 [10 Gbit/s data rate] for revenue, and they’ve taken advantage of this for the last several months."
In February of this year MFN and its subsidiary AboveNet Communications Inc. began implementing a $1.4 billion broadband IP/optical infrastructure expansion in North America and Europe. The network, which is designed purely for data, will allow MFN and AboveNet to deliver video, audio, and other broadband applications, says the service provider.
The main reason that MFN went with the M160s from Juniper instead of the GSR 12000 routers from market leader Cisco Systems Inc. (Nasdaq: CSCO) is that Juniper had the OC192 interfaces and Cisco didn’t, says Stephen Stuart, VP of research and advanced development for MFN. The carrier also liked the line-rate packet filtering provided by Juniper’s Internet II processor, which helps prevent denial-of-service attacks on their network, he says.
"We’re building out our OC192 links, and at the same time we’d like to use technology that allows us to do more sophisticated filtering and traffic control to stop denial-of-service attacks," he says. "The GSR didn’t have the interfaces, and we have a very aggressive roll-out. We couldn’t wait."
A Cisco spokeswoman said the company would not comment on the specifics of Juniper's business, but she said that Cisco would be delivering an OC192 interface for its routers by the end of the year.
While OC192 interface sales are still not the driving force in the router market, it won’t be long before they are, says Mehta. Last month Juniper CEO Scott Kriens said in the earnings conference call that the uptake has been much faster than he had expected (see Juniper's Revenues Rocket). "This coincides with feedback I’ve gotten from carriers," says Mehta. "OC48 may be the sweet spot for now, but it won’t be for much longer."
Cisco had 80 percent market share in the high-speed router market as recently as the first quarter of this year. New estimates of the market position won't be available until after Cisco posts its earnings next week, says Tam Dell’Oro, founder of The Dell'Oro Group, a market research firm. Juniper, which already announced its quarterly earnings last month, had an outstanding quarter (see Juniper's Revenues Rocket), citing the M160 and M20 products as hot sellers for the period.
Overall, the router market is expected to be bigger than predicted, says Dell’Oro. Instead of total sales coming in at $525 million for the second calendar quarter, it’s expected to be well above $550 million.
“I would suspect that everyone has sold a lot in this area,” says Dell’Oro. “Fundamentally, there is a lot more routing being done now, and the market is just bigger than anyone expected it to be.”
-- Marguerite Reardon, senior editor, Light Reading, (http://www.lightreading.com)