Optical/IP Networks

What's Up With Cisco at KT?

Cisco Systems Inc. (Nasdaq: CSCO) now claims to be treading on Juniper Networks Inc. (NYSE: JNPR)'s turf, with Monday's announcement that the CRS-1 core router has won business with KT Corp.

What should Juniper's reaction be? One big shrug, some analysts say.

Juniper has bigger troubles elsewhere, they say. Reiterating concerns that have been floating around for months, some analysts believe Juniper's situation on the Ethernet and enterprise fronts outweighs any battles between the CRS-1 and Juniper's T640 core router.

KT, which will use the CRS-1 as part of its Kornet backbone, is considered a plum contract because of Korea's hyperactive broadband market -- the country eats up bandwidth like popcorn and has an appetite for advanced services like real-time gaming.

KT reportedly is beginning a regional expansion of Kornet, which might be how the CRS-1 got an opening. A Juniper spokeswoman noted, though, that Juniper hasn't been ousted from KT's plans.

"Cisco has not replaced Juniper [in] KT Kornet’s core network, and the T640s will coexist with the CRS-1s in this network," the spokeswoman notes, adding that KT is using Juniper's M320 boxes as well.

Still, Cisco could chalk this up as a moral victory. KT was one of the earliest announced customers for the T640, and it got played up last year as the site of Juniper's 1,000th T640 deployment. (See Juniper Reaches Milestone .)

The T640 at the time was the more successful core router, having been released two years earlier than the CRS-1 and with a considerably lower price tag than the CRS-1's initially announced $1 million.

But Cisco has been pushing the CRS-1 heavily during the last 12 months, claiming big-name design wins including Cable and Wireless plc (NYSE: CWP), Comcast Corp. (Nasdaq: CMCSA, CMCSK), SoftBank BB Corp. , and Telstra Corp. Ltd. (ASX: TLS; NZK: TLS)

"They've been talking a big game with the CRS-1 and really ramping up the marketing spin," says one analyst requesting anonymity.

Cisco's KT win might be a blow to Juniper's pride, but the core network isn't the fight Juniper should focus on, some say.

Because the core market is essentially a two-vendor game -- Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7) never challenged for much market share, and Foundry Networks Inc. (Nasdaq: FDRY) is only starting its core-router efforts -- Juniper won't get forced out entirely. Juniper's foothold is less stable in edge networks and Ethernet, says Ray Mota, an analyst with Synergy Research Group Inc.

"The main area they need to focus on is getting more Ethernet-like capability" to combat the likes of Alcatel (NYSE: ALA; Paris: CGEP:PA) and Redback Networks Inc. , Mota says. "They've got four or five people there going after them at the edge, whereas in the core they've got 1.3."

Mota's is among the chorus of voices calling on Juniper to concentrate on Ethernet, particularly given the protocol's newfound importance in IPTV. Juniper has made some adjustments to its strategy in that area, but Mota thinks the company's Ethernet boxes don't reach the scale needed for IPTV. "Right now, the port density in some of that stuff has to be a priority for Juniper," he says. (See Juniper Tunes Its Ethernet, IPTV Stories.)

Deb Mielke, managing director of Treillage Network Strategies Inc. , thinks Juniper should be seeking ways to burrow more deeply into the enterprise market, where a second vendor to counterbalance Cisco might be welcomed warmly.

"A lot of companies would like an alternative just to rattle Cisco's chain," Mielke says. "And the whole value-added reseller chain would like to have an alternative so they could bid somebody against Cisco."

Given the expense of keeping up with core-router research, Mielke -- who has publicly praised the CRS-1 in the past -- doesn't think Juniper should make the core market a priority. "You can't compete when Cisco targets you, because they've got the money," she says. "You can shoot them for a while, but they'll come back and get you."

— Craig Matsumoto, Senior Editor, Light Reading

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