The growing number of mergers and acquisitions among network equipment suppliers has left fewer big names for customers to do business with. Cisco has become virtually the only name on the shopping list for many network managers - a situation that most would agree is unhealthy.
But a new star in the networking arena is currently consolidating its rapidly growing reputation among its core market of telecoms carriers and internet service providers (ISPs).
Juniper Networks announced earlier this month that it will sell its high-speed networking equipment to Nortel Networks' customers - a major boost to the fortunes of the four-year-old equipment maker, and potentially good news for technology users of all kinds.
Under the terms of the three-year deal, Nortel will sell Juniper's high-end router, which manages heavy internet traffic for carriers and ISPs. The alliance fills a big hole in Nortel's product range, enabling it to better compete against rival Cisco. Nortel has been floundering in the high-end router sector, and is several months behind schedule in releasing its own offering.
But Juniper, Nortel, Cisco and Lucent are playing for high stakes. Analyst company Infonetics Research predicts that the networking market will be worth $2.1bn this year and up to $12bn by 2003. This growth reflects a rise in internet traffic.
Cisco has a near monopoly with almost 85 per cent of the high-end routing space, while Juniper owns 15 per cent - a commendable achievement in such a short time. Other networking companies, such as Foundry Networks and startup Avici Systems, have also been developing their own contenders in this crucial sector, but lag behind Cisco and Juniper.
While Juniper has had some success in signing deals with customers of its own, such as UUNet and Cable & Wireless, the deal with Nortel should make it more competitive. Nortel does good business with European and Asian service providers and will help Juniper penetrate the traditional US carrier market. "This helps us accelerate the time it takes to get in with the traditional carriers," said a Juniper source.
But the Juniper/Nortel alliance is about more than creating a joint sales channel. The two companies will also jointly provide multi-vendor, end-to-end network management and service offerings such as Nortel's Preside serviceware.
Anil Khatod, president of Nortel's global internet business solutions, said: "Together we represent a new competitive force in the market. This benefits our customers and both companies. We're accelerating build-out and deployment of global inter-networking."
Scott Kriens, Juniper's president and chief executive, added: "This alliance will make it possible to deliver advanced IP services that will eliminate bottlenecks and meet the speed and bandwidth demands of emerging applications such as streaming video, Voice over IP and multicast."
Turning up the heat
Anyone doubting Juniper's ability to compete with Cisco was given reason to think again earlier this year. In March, the company unveiled a router that was four times faster than its existing flagship product. Analysts were quick to point out that the M160 was also speedier than competing products offered by Cisco.
But lagging behind its competitors is an unfamiliar experience for Cisco. Michael Howard, an analyst at Infonetics, said at the time: "This proves Juniper is a viable competitor to Cisco. To take any share from Cisco is no mean feat these days. A startup always has to prove itself, and this new product shows Juniper is continuing to develop next-generation products. This means Cisco has a competitor that has staying power."
Other analysts have drawn parallels with the race between Intel and AMD to build the fastest PC processor. But while most PC users cannot spot the difference between an 800Mhz chip and a 1Ghz chip, faster routers are more meaningful to them because they can speed access to networks that are becoming increasingly burdened with online traffic.
As a result, Raj Mehta, of US-based analysts Ryan Hankin Kent, believes Cisco is now on the defensive. "Juniper is defining what everyone has to measure up to, and it's doing it aggressively," he said. In other words, Cisco may not be able to sustain the rate of technical development that it is accustomed to. The company has long predicted that its runaway leadership in high-end routers could not last forever, and this summer may be a turning point.
Cisco claims that its latest router technology, which is currently in trials and is expected to ship by the third quarter, provides better performance than Juniper's product. Initiative once lost, however, is hard to regain.
But whatever the outcome may be, increased competition is something for buyers to rejoice about.
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