Cisco Rolling Out Big New Box

A Cisco representative declined to comment.

But some analysts see the software angle as the real important aspect of the new router. CIBC analyst Steve Kamman argues that Cisco's router operating systems are the equivalent in their broad use to Microsoft's (MSFT Quote) Windows software. The big opportunity, says Kamman, is down the road as Cisco moves all its routers to the new software and convinces customers to upgrade to the HFR's new, more stable operating system.

Apparently, unlike the old monolithic IOS software, the new IOX system is modular, making it easy to add features. It is also continuously available, meaning upgrades and system reboots can be done without shutting down the machine. This characteristic is aimed particularly at service providers who demand always-on capability.

Though Cisco will likely announce a couple customers for its CRS1 box, few observers expect immediate earth-shaking success.

One problem is Juniper's strength with phone companies, an area where Cisco has repeatedly proven weak.

Another issue is the changing nature of networks.

Early in the Internet age, experts believed that the best system would feature massive routers in the center fed by small routers spread around the edges. But over time, engineers have shown a preference for decentralization. Increasingly, routers installed toward the edge have reached higher and higher capacity, reducing the need for a lot of big central boxes.

"I think we've seen that even the biggest customers need about 10 of these HFR-type routers, not 100, as originally hoped," says one industry analyst.

Cisco's stock is down 27% from its January high this year and was largely unchanged at $21.57 Friday.