Cisco (NSDQ:CSCO) is positioning its new CRS-3 Carrier Routing System in the highest end of the service provider router market, but said Tuesday that as bandwidth and other networking concerns increase, the opportunities for more traditional solution providers to profit with the system will grow.
Meanwhile, however, its closest competitor in the space moved quickly to dismiss the CRS-3's market viability.
"We agree with Cisco that the Internet and networks themselves require fundamental change, but Juniper takes a different, open-standards approach that better benefits service provider economics and end user experiences. That's why we've been delivering 100GB-capable systems since 2007," said Mike Marcellin, Juniper's vice president of marketing, infrastructure products group and Junos Ready Software, in a statement e-mailed to ChannelWeb.
Announced Tuesday, Cisco's CRS-3 family offers what Cisco claims is 12 times the traffic capacity as the nearest competing system, boasting 322 Terabits-per-second performance. The "12-times-the-nearest-competitor" statement, thought to be directed at Juniper, is misleading, Marcellin suggested.
"The claim of 12 times the traffic capacity of the nearest competing system is based on a theoretical maximum of 72 interconnected CRS-3 chassis in order to achieve the 322Tbps total capacity -- this will likely never be deployed in practice due to space, power, and manageability realities," he said. "With its new T-Series chipset announced in early February, Juniper will deliver a four Terabit system in a half rack configuration while the CRS-3 requires a full rack to deliver four Terabits.' That's a real space and power savings for every unit deployed."
Cisco intends the CRS-3 as its new flagship carrier router. It will replace Cisco's six-year old CRS-1 carrier router family, but users need only new line cards and fabric to upgrade, and can rely on their existing CRS-1 chassis, route processors and power systems, according to the company.
"They [service providers] want to make sure they don't need to go through a rip-and-replace model, as some of our competitors do," said Doug Webster, Cisco's senior director of service provider marketing, in an interview. "We want to leverage the strong installed base of CRS-1. We have some 5,000 CRS-1 units deployed already, and when we went about looking at the architecture, we opted to preserve and leverage the investments. Op-ex is another huge concern for our providers, and so it's also 60 percent more energy efficient than competitive solutions."
Pricing for CRS-3 packages begins at $90,000. The routers are in field trials at present, and Cisco didn't confirm when they would be generally available.
The high-end routing products like CRS-1 and CRS-3 represent only about 4 percent of Cisco's overall revenue, as pointed out in research notes Tuesday by UBS' Nikos Theodosopoulos and other analysts.
That's still a "non-trivial" number, Webster argued, and allows Cisco to engage "different silos of its service provider business."
Webster also acknowledged that the CRS-3 family targets high-end service providers and carriers who face enormous traffic demands. But he said Cisco has also found success selling high-end carrier router products into governments and enterprises, and as traffic and mobile infrastructure needs continue to increase with the growth of networks, VARs, too, can service many of those customers.
"For service providers who aren't the nation's largest, a lot of those products are sold through VARs," he explained. "Plus, there are a lot of smaller providers who are getting into the market for high-end gear. There's a return on investment. The government sector, in particular, or large universities or research centers, are also deploying these types of technologies. Enterprises, too, where if they have particularly large networks effectively start to resemble service providers. The beauty is that we can scale it as it grows."
The overall service provider router market is itself bouncing back. According to a late February report by Dell (NSDQ:Dell)'Oro Group, the market in the fourth quarter of 2009 recorded its highest sequential growth rate since mid-2007, with quarterly router sales increasing 15 percent.
"The good news is that router manufacturers saw their customers loosening purse strings during the fourth quarter, and that lends confidence for market recovery in 2010," said Shin Umeda, vice president at Dell'Oro Group, in a statement with the research note.
According to Dell'Oro, Cisco and Juniper maintain their No. 1 and No. 2 respective worldwide market share positions in service provider routers, with Cisco's quarter-over-quarter growth at 11 percent and Juniper's at 17 percent. Alcatel-Lucent, in third place, grew 17 percent according to Dell'Oro, and Huawei (No. 4) and Ericsson (No. 5), grew 22 percent and 39 percent respectively
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