Cisco is introducing a new router, the Cisco 10720 Internet router, aimed at networks in metropolitan areas, so telecommunications service providers can offer their customers new communications services such as video, phone calls over the Net and virtual private networks, which are secure Internet connections to corporate networks.
The networking giant has also repositioned its high-end Cisco 12000 series family of routers to encompass the "edge" of networks, where service providers' networks intersect with each other and local networks. Cisco, the market leader for routers, has historically sold its 12000 router family to the "core" part of networks, through which most Internet traffic travels. Routers are devices that ship Internet traffic from point to point along a network at high speeds.
As part of the strategy, Cisco on Tuesday announced a smaller 12404 Internet router that is targeted for the edge of networks and runs at speeds of 10 gigabits per second (Gbps). Cisco also released new add-on technology called "line cards," which allow service providers to offer new Net-based services.
Analysts say Cisco's strategy is aimed squarely at the metropolitan networking market, which is expected to grow from $6.3 billion in revenue in 2000 to $17.2 billion by 2003, according to industry consulting firm Infonetics Research.
"They're taking these 12000s and making them competitive and attractive for (the) metro," said analyst Deb Mielke, of Treillage Network Strategies.
Cisco's 12000 series routers--though an esoteric part of the technology market--are the company's bread-and-butter technology. The routers have faced stiff competiton from the likes of Juniper Networks in the past two years, but Cisco has, in turn, developed more new technology to combat the incursion into a market it once dominated.
Analysts say Cisco's announcement Tuesday allows it to better compete with Juniper in the high-end router market, and others, such as Riverstone Networks, Foundry Networks and Extreme Networks, in the market for metropolitan networks.
"This is a good step for Cisco," said analyst Dave Dunphy, of Current Analysis. "They're reaffirming a lot of their dominance in Internet Protocol, and trying to build the market potential for their routers and get those into a larger number of carriers."
The new metro-focused Cisco products are based on Ethernet networking technology and target emerging service providers, as well as traditional service providers. Emerging service providers such as Yipes Communications, Cogent Communications and Telseon have built networks using Ethernet to connect businesses to faster Internet access at lower costs than what traditional phone companies have historically provided. They are also offering new services, such as the ability to order extra network bandwidth anytime they want.
"The opportunity, we see, is for service providers to generate extra revenue," said Roland Acra, head of Cisco's high-end routing group. "We are opening up to them ways to leverage the infrastructure that they've invested in and turn up new services."
Cisco previously sold metropolitan networking hardware aimed at service providers who used older technology called SONET, analysts said.
"What this does is give them a full portfolio and positions them very powerfully against competitors," Mielke said. "Customers can put together a metro network anyway they want with Cisco."
Executives from rival Riverstone were less impressed.
"It validates what we've said for two years--that the metro is where the telecom money is being spent. They're recognizing what we've recognized," said Steve Garrison, Riverstone's director of corporate marketing.