Juniper Adds to Its Artillery By Cody Willard Special to TheStreet.com 5/15/01 4:28 PM ET

Juniper (JNPR:Nasdaq - news - boards) stocked its stores with more ammunition Tuesday.

The company announced a set of hardware and software upgrades to its line of routers. The upgrades allow service providers to offer new services over Juniper's routers. If the new capabilities are up to the company's typically very high standards, they could help it continue to take market share from Cisco (CSCO:Nasdaq - news - boards).

Not only that, but the new additions to Juniper's routers put it in direct competition with other equipment vendors, too: Nortel (NT:NYSE - news - boards), Lucent (LU:NYSE - news - boards), Alcatel (ALA:NYSE - news - boards) and many upstarts like CoSine (COSN:Nasdaq - news - boards) and Ennovate.

The software upgrades allow service providers to offer virtual private network (VPN) services over Internet-protocol-based networks. VPNs are private data networks that are run over public networks. They sort of take the best of both worlds because they allow service providers to offer a (virtually) private network while spreading the costs of that network over all of its customers, rather than having to lease entire lines to one customer. Juniper's new hardware updates are interfaces that will allow service providers to make more efficient use of their networks.

Juniper's announcement comes at a time when service providers are desperately looking for new services to layer on top of existing offerings. Companies correctly see VPNs as one of these new services. The VPN market is already large, and it's growing. Total VPN market-size projections for 2002 vary from the Forrester Research projection of $9.8 billion to the lnfonetics Research forecast of $11.9 billion, and even I, an eternal skeptic of market-size projections, believe that there are several billion dollars of VPN revenue to be had today.

VPNs will be set up for communications between remote storage facilities (like what StorageNetworks (STOR:Nasdaq - news - boards) builds) and enterprises. VPNs will be increasingly used between points of presence between hosting facilities (like what Exodus (EXDS:Nasdaq - news - boards) builds). Points of presence (POPs) are buildings where carriers' networks meet, like where a Global Crossing (GX:NYSE - news - boards) exchanges traffic with an incumbent local exchange carrier such as Verizon (VZ:NYSE - news - boards).

Also significant is that Juniper added features that will allow service providers to set up "accounting profiles" that collect accounting and billing statistics of users. This is important because all service providers continue to struggle with the integration of operations support systems (OSS) for their traditional voice and data networks with today's IP-centric networks. Finally, Juniper added features that will help service providers prioritize traffic over their IP networks, which is another development that will facilitate the adoption of IP-based phones. This new addition means that it will now be easier for carriers to give voice traffic a higher priority than plain old Internet data traffic.

Juniper's upgrades will allow much of this virtual private networking to be done over the routers that it already sells. Even routers that are already in place are upgradeable to these VPN features with a simple software download of the newest iteration of JUNOS -- the highly effective and efficient software code that runs Juniper's routers.

And while Cisco has had many of these features already built into its routing platforms, Juniper with this announcement adds yet another weapon to its arsenal in its war -- and it is quickly becoming an all-out war -- against Cisco. Particularly, in the core and metro segments of the network, where carriers will be quick -- as in now! -- to adopt these new features.

I should also mention that these moves by Juniper, as well as its rumored soon-to-be-announced set of 40-gigabits-per-second interfaces for its core routers, spell bad things, very bad things, for companies like Avici (AVCI:Nasdaq - news - boards) and Foundry (FDRY:Nasdaq - news - boards), both of which are finding it very hard to gain much traction in the core routing market.

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