Cisco, Juniper Facing a New Foe

Cisco's router chief Kelly Ahuja said last week the CRS-1 has been sold to 28 customers, and 13 other telcos are testing the system. To date, 100 units have been shipped.

And while new products have helped Cisco defend its turf at the core, where telcos need bigger and bigger boxes to keep up with rising levels of Internet traffic, a more heated battle has broken out closer to the source of Net traffic.

Cisco is the king of the so-called edge router market, with 57% of the business last quarter. But challengers like Juniper and Alcatel (ALA) have made strong gains lately.

Alcatel is a rising star in the edge, having captured 7% of the market, up from 2% it controlled a year ago.

Alcatel won a $2 billion edge router contract with Australia's Telstra (TLS) last week, a deal that Cisco, Lucent (LU) and Nortel (NT) all coveted.

Last Friday, Cisco agreed to pay $5.3 billion for set-top box maker Scientific-Atlanta (SFA), giving the company a whole new video infrastructure market to play in and relief from the confines of its stagnant business-networking rut.

"The momentum for Alcatel is pretty significant," says Umeda. "They have a few big customers and that base is getting larger. The main thing for them is to get beyond their base and drive revenue growth over the long term."

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