Cisco widens lead against Juniper

Cisco Systems has grabbed back some market share from rival Juniper Networks in the lucrative market for high-end networking equipment, a new study shows.

Cisco captured 60.3 percent of the $535.4 million market in the 2001 second quarter, up from 59 percent in the first quarter, according to research by the Dell'Oro Group. During that time, Juniper's market share dropped to 34.7 percent from 38 percent.

Before the latest quarterly results, hard-charging Juniper had steadily eroded Cisco's dominance in high-end routers the past few years. High-end routers are devices that telecommunications carriers and service providers use in their networks to direct Internet traffic from one area to another at high speeds. Juniper had seized its biggest share of the market in the 2001 first quarter with 38 percent of the market.

But with the latest quarterly results, Cisco has managed to put some distance between itself and its younger competitor. The distance between Cisco and Juniper grew by nearly 5 percentage points. In other words, the gap between market share for Cisco and Juniper grew from 21 percent to about 26 percent in the second quarter.

The Dell'Oro study appears to validate Cisco Chief Executive John Chambers' claim last week that Cisco had captured 3 percent to 5 percent market share.

Cisco, however, didn't do it by itself. As Juniper's piece of the overall market fell, a third player, Avici Systems, doubled its market share, from 2.1 percent in the first quarter to 4 percent in the second quarter.

Analyst Tam Dell'Oro of the Dell'Oro Group said Cisco is regaining market share because it introduced a high-speed router earlier this year that finally matched the speed and capacity of Juniper's router.

"Last year, Juniper didn't have any competition in the (highest-end router market). This year they do," Dell'Oro said.

But for the second straight quarter, the total size of the high-end router market plunged. Second-quarter sales reached $535.4 million, a 29 percent drop from first-quarter sales of $753 million.

In the 2000 fourth quarter, sales had reached a high of $835 million.

Dell'Oro said she expects the market will rebound once the economy recovers and service providers start spending again. Service providers need the extra bandwidth to offer new services, such as video-on-demand.

"This would be one of the first markets to rebound," she said. "Service providers we've interviewed reiterate their intention to launch new services and say they require more bandwidth in their networks."