Convergence, need for next-generation networks drive router sales growth

As service providers seek to upgrade their networks to deliver more multimedia and integrated services, router manufacturers continue to see increased sales.

Driven by a strong GDP and continued service provider demand, router sales continued to be strong, with Cisco maintaining the lion's share of the market while Juniper Networks grew in several key sectors, a recent study found.

The study, conducted by Synergy Research Group, also noted several trends that were driving growth in sales.

The first trend is the convergence of next-generation networks (NGN), as providers seek "simplified and scalable service where an infrastructure is a fundamental requirement in building out [a] converged NGN" that supports access through copper, cable, fiber, and radio wave.

Another trend driving growth is the competitive pressure that service providers are feeling as their fields converge. To deliver the "experience-based services" customers demand, many service providers are looking to upgrade or otherwise increase the performance of their networks.

Finally, the study found that the increasing importance of high-bandwidth, media-rich content has caused providers to focus more closely on core performance, particularly in increasing core capacity.

Of the three largest router providers, Cisco and Juniper both saw increased revenues in 2007's third quarter, 9% and 15% respectively, while Alcatel-Lucent saw its first quarterly decline in revenue, a 7% dip, since the first quarter of 2005. Overall, the industry as a whole saw revenues grow 8% over the previous quarter, to $3.3 billion.

The report noted that Juniper's market share grew 0.1% in the core and 1.5% in the MSE segment.

"We are very pleased with our positive momentum in the service provider market, with 33% year-over-year growth (Q3 2006 to Q3 2007), as we continue to sell both our infrastructure and security solutions to wireline, wireless, cable and content service providers," wrote Ravi Medikonda, director of service provider marketing at Juniper Networks, in an email. He said the company expects to capitalize on service providers' increased demands.

"The requirements for an underlying high-performance network infrastructure are becoming clearer," Medikonda wrote, "and therefore the Juniper solution and the differentiation we provide is becoming more apparent than ever to the marketplace and to our customers."

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