Juniper Wins Router Round Over Cisco

Cisco (CSCO) is vowing to end Juniper's (JNPR) winning streak.

For the second year in a row, Cisco saw its lead in the critical mega-router market slip significantly at the hands of sole rival Juniper. But Cisco says its own big box is catching on with customers, and the company expects to regain lost ground this year.

While analysts see the renewed vitality in Cisco's core router business as encouraging, the slipping San Jose, Calif., tech giant needs a lot more than one hot product to reignite the growth engines.

With the fourth quarter results in, the Dell'Oro Group says Juniper increased its share of the core routing market to 39.6% from 38.1% in the prior quarter. Meanwhile, Cisco dropped to 55.4% from the 56.9% it held in September, according to the Dell'Oro Group.

For the full year, Juniper increased its take of the big-router market to 36.6% from 30.8% last year. Those gains came at Cisco's expense. At the end of 2004, Cisco's share of the market fell to 57.6% from 62.4%.

"It's getting pretty close," says Dell'Oro analyst Shin Umeta. "I think it's the fact that Juniper has been out with the T-series longer than Cisco, and they have been able to build on that platform."

Juniper introduced its big router dubbed "Gibson" three years ago. After several delays, Cisco finally responded by rolling out its big box called CRS-1 in May. These so-called core routers have been in high demand by big phone companies looking for super-sized traffic management systems to handle the growth in Internet communications.

Last year, total revenue in the core router market grew to $1.2 billion, about 66% higher than 2003 levels, according to Dell'Oro.

Looking ahead, Dell'Oro's Umeta says he expects core router sales to cool down a bit. He predicts revenue growth of about 27% this year.