Juniper

(JNPR) - Get Report

keeps chomping into

Cisco's

(CSCO) - Get Report

formidable lead in two key markets.

For the second quarter in a row, Cisco saw its lead in the critical mega-router market slip significantly. The San Jose, Calif., tech giant's market share dropped by 4 percentage points in the quarter ended in September. Meanwhile Juniper swiped 5.7 points of share, according to a Dell'Oro Group report released Thursday.

Industrywide sales of super-sized routers -- large network junction boxes used by telcos to help manage the flow of information traffic on the Internet -- jumped 33% to $347 million in the third quarter. That gain was fed largely by a 57% sequential surge in big router sales at Sunnyvale, Calif.-based Juniper.

Cisco has been losing ground in this arena as Juniper's big boxes continue to replace Cisco gear. Orders for Cisco's

new CRS-1 have yet to materialize.

Juniper's share of the two-player market hit 38% at Sept. 30, up from 32% in the second quarter. Cisco's dropped to 62% from 67%.

"Service providers are dealing with the increase in network traffic driven by the huge rise in broadband subscribers," says Dell'Oro analyst Shin Umeda.

The sliding share corresponds to Cisco's lukewarm earnings report last week, which indicated the company is feeling price pressure as it offers customers discounts to win business. Increasing competition has

started to deflate Cisco's wide gross margins. The router titan started the year with 70% gross margins, but that figure fell to 67% as of the most recent quarter ended in October.

Perhaps even more alarming, Cisco's router dominance in the so-called edge market is also ebbing. Last quarter, Juniper gained 6 points in the edge router market, taking its share to 25%.

Juniper's gain, once again, came at Cisco's expense. The computer networking giant lost 5.3 percentage points, leaving it with 62% of the edge market.

Edge routers sit at the gateway to the Internet, merging user traffic on and off the Net.

One router segment where Cisco did shine was in the middle range. Cisco gained 10 percentage points for a total share of 84% of the market. That gain came as Juniper's loss. Juniper's slice of the midrange router business fell 10 percentage points to 7.6%.

Cisco shares were up a dime to $19.64, and Juniper was up 13 cents to $28.85 in Thursday action.