November 20, 2001 3:00 PM PST

Juniper can't shake Cisco's shadow

No matter what deal Juniper Networks makes, the one constant as it expands its presence in the industry is rival Cisco Systems.

Juniper announced earlier this month plans to purchase Pacific Broadband Communications for $200 million in stock, a move that will add cable operators to the company's large base of Internet and telecommunications customers. Juniper makes networking equipment called routers that shuttle Internet, or IP, traffic around networks.

But as Juniper attempts to cultivate a wider set of customers to sell more of its primary products--Net routing systems--it risks losing the focus that has helped it attain industry status as a second source for technology once dominated solely by Cisco. Cisco has a large presence among cable operators, forcing Juniper to battle the networking behemoth on multiple fronts.

"Cisco is the constant competitive threat to Juniper," said Ron Westfall, analyst with industry watcher Current Analysis.

Recent research indicates that a resurgent Cisco is taking back some of the market share it lost to Juniper. Others, such as start-up Unisphere Networks, have also been making inroads in the routing market. Despite these gains, Juniper has not been hit as hard as some others in the networking industry amid a sharp downturn in spending by customers.

Juniper continues to develop new products as well. It intends to introduce the fruits of a joint venture with wireless equipment giant Ericsson by next quarter, according to the company, as part of a strategy to make wireless networks more Internet-ready. It also has plans to match Cisco and start-ups, such as Pluris and Hyperchip, at the high end of the routing market with technology code-named Gibson, according to reports.

Juniper executives said the company's strategy remains the same, even as it attempts to expand beyond its initial niche of providing core Net routers for the largest networks in the world into other markets dominated by Cisco.

"Our vision continues to be providing (Internet) infrastructure that allows carriers to build converged IP networks," said Carl Showalter, Juniper's vice president of marketing. "There is an opportunity to expand the franchise."

Some analysts surmise that Juniper's forays into new markets where Cisco dominates may continue. Lower valuations for start-ups and smaller public companies, such as Sonus Networks, are making deals more palpable than during the recent technology boom.

Earlier this year, Juniper was poking around Redback Networks as a possible acquisition but backed off.

"Given the company's goal of leveraging its strong core routing franchise into the network's edge, (the Pacific Broadband acquisition) is likely to be followed by several more key acquisitions, partnerships and joint ventures," according to Chet White, a Wells Fargo Van Kasper analyst.

Pacific Broadband is Juniper's fourth acquisition as a company and its first deal for technology that includes hardware. Pacific Broadband makes cable modem termination systems. It will showcase its cable equipment at next week's Western Cable Show, an industry event held annually in Anaheim, Calif.

Westfall said it remains a "paradox" of the networking industry that a company looking to expand its reach will always run into Cisco because of the breadth of that company's products.

 

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