Cisco launches next-gen router

Ben Klayman

CALIFORNIA: Cisco Systems Inc. introduced its next-generation router, a machine it is counting on to stop its slide in the highly profitable market for gear that directs the heaviest loads of Internet traffic.

Cisco is touting its Carrier Routing System, dubbed CRS-1, as the fastest, biggest, most reliable and flexible router that phone companies will use to carry the increasing levels of Internet and data traffic.

"We believe this is a stronger product than what's out there in the market," Mike Volpi, Cisco's head of routing, told Reuters. "We think this will give us an edge versus the competition."

The router, to cost between $250,000 and $2 million or more per unit, when it goes on sale in July. It is seen as a product that will allow Cisco to regain the cutting edge in the market for expensive, advanced networking gear, a market for which the company has vowed to fight.

Cisco's share of the high-end router market has slid in recent quarters, although some analysts blame that on customers waiting for the new model.

In the first quarter, Cisco's share fell to 59.4 percent from 61.7 percent in the preceding quarter, according to research firm Dell'Oro. In the same period, smaller rival Juniper Networks Inc.'s share grew to 34.1 percent from 31.4 percent.






High-end routers are the fastest-growing segment of the market, according to Dell'Oro. The segment hit $734 million last year and is expected to grow another 31 percent in 2004 as telephone companies race to meet the demand caused by the growth of high-speed Internet subscribers.

Routers, which look like pizza boxes piled atop each other, are one of the most boring pieces of equipment to look at, but probably the most crucial as they are used to direct information and data on a network.

Some analysts and customers believe the new Cisco router will allow the San Jose, California-based company to regain its footing and perhaps march on competitors.

"It positions them to keep their dominant level of market share, if not put them in a position to gain share," Yankee Group analyst Mark Bieberich said.

Volpi urges caution, as customers tend to test any new equipment over long periods before installing it.

"It's not like you show up and the next quarter your market share booms," he said. "It's going to be six months, a year, 18-month cycles. We have to be realistic about how quickly we can change the status quo."

How long Cisco maintains any edge, however, remains a question as Juniper is expected to introduce its own next-generation router in the next few months.

The main benefits of Cisco's new router include high speeds that can reach 92 terabits per second, when the numerous models are linked, fast enough to transfer the entire collection of the U.S. Library of Congress in 4.6 seconds, the company said. It also offers more capacity and greater reliability that will allow customers to eliminate the backup routers typically used to ensure network service, analysts said.

The new router also boasts a longer lifetime of 10 to 20 years versus today's three years, and the ability to upgrade software without shutting down the system thanks to a new operating software system, called IOS-XR.

"This device will allow us to have a higher capacity network at a lower cost that is more reliable for us to operate," Sprint Corp. Vice President Oliver Valente said.

Sprint, which uses only Cisco routers on its network, spends tens of millions of dollars a year on networking gear. It has been testing the CRS-1 router for two years and expects to have it carrying live traffic within the next several weeks, Valente said.

By allowing the use of fewer, more reliable routers, carriers will be able to redirect money,normally spent on that gear elsewhere, he added.

© Reuters