Bloomberg News

Cisco Said to Unveil Routers to Woo Users From Juniper, Alcatel

June 06, 2011

June 6 (Bloomberg) -- Cisco Systems Inc., the largest maker of networking equipment, will introduce two new routers to help service providers handle surging data and video use, according to two people with knowledge of the company’s plans.

The company will bill the machines, from the flagship ASR 9000 line, as capable of transmitting data more than 25 times faster than machines from Juniper Networks Inc., said the people, who asked not to be named because they weren’t authorized to speak for the company. Cox Communications Inc., Comcast Corp., Fastweb SpA and Tata Communications Ltd. are early customers.

Cisco, whose shares have declined more than 20 percent this year, is refocusing on routers and switches after forays into more than 30 new businesses gave rivals an opening to gain share in key markets. The service-provider business, where the company competes with Juniper and Alcatel-Lucent, accounts for more than a third of Cisco’s revenue.

Service providers are struggling to keep up with demand for data and video across their networks as consumers increasingly watch streamed movies from Netflix Inc. and Hulu LLC on smartphones, Web-connected televisions and tablet computers. By 2014, Cisco has predicted that 90 percent of consumer Internet traffic will be video, driven by devices connected to the Web.

Double the Size

San Jose, California-based Cisco leads the market for routers and switches, equipment that directs Internet traffic. Companies buy its switches for corporate networks, while phone and Web-service providers typically purchase its routers, which are more expensive.

Revenue for the ASR 9000 increased 140 percent in the quarter that ended April 30. Synergy Research Group estimates that Cisco’s share is more than double the size for Juniper, its closest rival, in the market for service-provider equipment.

Cisco is aiming to take advantage of a stumble from Juniper, after Chief Executive Officer Kevin Johnson said at a conference last week that most sales in the current quarter would come toward the end of the period. The comments sent Juniper’s shares down by the most in more than two years.

China Telecom Corp., the world’s largest mobile-phone operator by users, said last week it would begin using the ASR 9000 router to meet growing subscriber demand for new services. Japan’s NTT Plala Inc. also will buy the router.

Cisco, which announced plans last week for a press conference with service providers tomorrow, declined to comment beyond its statements.

--Editors: Jillian Ward, Nick Turner

To contact the reporters on this story: Olga Kharif in Portland at okharif@bloomberg.net; Joseph Galante in San Francisco at jgalante3@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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