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Telecom convergence drives router surge

Router vendors reap the benefits of continued strong sales as telecom service providers continue to upgrade their networks to deliver multimedia and integrated services.

Router sales continue to be strong, according to a recent study, as telecommunications service provider demand remains high as they build out converged, next-generation networks. Cisco maintains the lion's share of the market, while Juniper Networks' share has grown in several key sectors. The study, conducted by Synergy Research Group, noted several trends that are driving router sales growth.

The convergence of next-generation networks (NGN) is the main sales driver, 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, according to the study.

Competitive pressure is also driving service providers 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, all of which spells good news for equipment vendors.

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 on increasing core capacity.

Of the three largest router providers, both Cisco and Juniper 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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