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Who is Winning the Battle in the High-End Router Market?

Michael Wijaranakula
Staff Researcher, Infotix Systems, Inc. -  July 21, 2004

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Network routers are vital for managing the ever-growing Internet and communications traffic as they are the devices used to link networks and direct and forward the flow of data by selecting the best transmission routes. The industry’s leading networking companies that produce high-end routers and switches are upgrading efficiency, reliability, security and affordability of their next-generation equipment.

The two companies dominating the worldwide router market are U.S. makers Cisco Systems (NASDAQ: CSCO) and Juniper Networks (NASDAQ: JNPR), which have both recently released their next-generation router systems. Shenzhen, China-based Huawei Technologies Co. Ltd. is now a key player in China's telecom market and is quickly becoming an active participant in the global telecom market. Smaller corporations are eager to get a small piece of a large sector of the technology industry. Cisco System’s Carrier Routing System-1 or CRS-1, introduced in May, is currently marketed by Cisco

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System’s as the fastest, biggest, most reliable and flexible router that phone companies will use to carry the increasing levels of Internet and data traffic. CRS-1 units, ranging from $250,000 to $2 million when it goes on sale in July, are seen by Cisco as the product to regain its edge in the high-end core router market lost in the past months. In the first quarter, Cisco's market share fell to 59.4 percent from 61.7 percent in the preceding quarter, according to a Redwood City, CA-based market research firm Dell'Oro Group. In the same period, smaller rival Juniper Networks Inc.'s market share grew to 34.1 percent from 31.4 percent. The CRS-1 router is powered by Cisco Silicon Packet Processor (SPP), a 40 gigabits per second (Gbps) application specific integrated circuit (ASIC) with 38 million gates, 185 million transistors and 188 high-performance programmable 32-bit RISC processors. The SSP, which is manufactured by IBM (NYSE:IBM) at the 300mm Fab in East Fishkill, N.Y, can execute 47 billion instructions per second (BIPS). CRS-1 is equipped with sixteen 40-Gbps slots and has speeds of 640-Gbps. The unit, when scaled up to 1152 40-Gbps slots, will have a total switching capability of up to 92 terabits per second (Tbps) and theoretically can transfer the entire U.S. Library of Congress in under 5 seconds.

The CRS-1 runs on the Cisco IOS-XR® Software Release 2.0, the newest member of the Cisco "Internetwork Operating System" (IOS) Software Family. The Cisco IOS-XR® is designed to support the unique multi-CPU, multi-shelf, distributed architecture of the Cisco CRS-1 with comprehensive network security features and is more modular so that carriers can more easily add new features and troubleshoot problems. The Cisco IOS® Software is the world's most widely adopted and deployed network infrastructure software since its inception but over the years, has evolved into a patchwork of code, full of bugs and security flaws.

In the past several months, Cisco Systems has acquired several security software companies, including Riverhead Networks and Twingo Systems, to enhance its Self Defending Network strategy. Riverhead Networks, a San Jose-based security software firm, which was acquired last spring for $39 million dollars, specializes in detecting "Distributed Denial Of Service" or DDoS attacks, worm attacks, and blocks irregular flow of Internet traffic in real time. The smaller software security firm, Twingo Systems, specializes in desktop security solutions for Secure Socket Layer (SSL) Virtual Private Networks (VPNs). 

Since Juniper Networks released its 640-Gbps T640 high-end core router in the year 2002, the company has made major acquisitions including Unisphere Networks and NetScreen Technologies and has added several high-end edge router lines with advanced security features into its enterprise portfolio. The $760 million buyout of the edge router competitor Unisphere in 2002 has lifted Jupiter to the No. 2 position, behind Cisco in the edge router market. This market sector is expected to grow to around $5 billion in 2005, according to San Jose, CA-based Infonetics Research. The recent $3.6 billion acquisition of NetScreen, which helps build firewalls against viruses and hackers and constructs VPNs for corporate communications, enables Juniper to penetrate its business deeper into the Fortune 500 corporate market. 

The new J-Series and NetScreen-5GT Asymmetric Digital Subscriber Line (ADSL) security appliances will “bring new levels of security, performance and reliability to the customer edge,” said Jim Dolce, executive vice president, Worldwide Field Operations, Juniper Networks. The J-Series includes a new modular operating system, JUNOS, which would allow multiple functions, greater networking speed, and perform complex and advanced routing of traffic. NetScreen-5GT ADSL is a new form of security for servers that allows greater protection from computer viruses, deep inspection firewall and other security features such as VPN. Combined with the J-Series routers, Juniper claims the system will be the most secure and advanced routing currently available.

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