Report: Juniper Is Eating Cisco's Lunch In U.S. Service Provider Routing Market

Juniper Networks appears to be on a comeback in the U.S. service provider market as it steals market share from networking rival Cisco -- which recently reported a sharp drop in its bread-and-butter router business.

For the third quarter of 2015, Juniper's U.S. service provider routing market share rose to 28 percent from 24 percent year over year, according to new data from Reno, Nev.-based market researcher Synergy Research Group. Cisco's U.S. share, in comparison, dropped to 49 percent, down from 53 percent the year before.

"Juniper is making a comeback in the U.S.," said John Dinsdale, chief analyst and research director at Synergy Research Group, in an interview with CRN. "Cisco has been doing very well in Europe and [Asia-Pacific], but in the U.S., it's a different picture. You've got to come to the conclusion that Juniper is bouncing back pretty strongly. Juniper has been a bit of a soft target for a while, and it's now getting back to where it use to be, regathering some of its old glory. It's now a sterner challenge for Cisco."

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In a 10-Q form recently filed with the U.S. Securities and Exchange Commission, San Jose, Calif.-based Cisco said it's having trouble in its high-end routing sales in the service provider market.

"Sales to the service provider market have been characterized by large and sporadic purchases, especially relating to our router sales," said Cisco in the filing. "Within the high-end router product category, we experienced lower sales of most of our legacy high-end router products, lower sales within our Cisco Aggregation Services Router category and Cisco Network Convergence System platform."

Cisco reported declining routing sales of 8 percent, to $1.8 billion, for its first quarter of fiscal year 2016, ended Oct. 24.

Juniper's U.S. market share has not reached this height in more than four years, said Dinsdale.

As North America is the biggest region, accounting for 36 percent of worldwide revenues, solution providers say Sunnyvale, Calif.-based Juniper is in prime position to win even more service provider share through its open technologies and ability to have its solutions easily upgraded.

"Juniper's been able to take a lot of the companies that are out there, like a Verizon, and go in -- and we've done some of that work for Juniper -- and do in-service software upgrades for newer switch fabrics and newer, higher-capacity cards without blowing up your customer's network, and that is absolutely not the case with Cisco," said George Miller, vice president of sales at Integration Partners, a Lexington, Mass.-based solution provider and Elite Juniper partner.

Miller said service providers are selecting Juniper to increase their density and Gigabits Ethernet (GbE) needs in their chassis. "Service providers don't have any room in their rack. It's fully populated -- that's the biggest challenge they have," he said.

With Juniper, service providers can easily upgrade, for example, from 40GbE per slot to 500GbE without disrupting the circuit side.

"[Juniper is] future-proof, with the ability to upgrade in-service to add additional capability without performance degradation, in a reliable way, and for a service provider, that's a big deal. That's why these Web companies have also gone with Juniper, because they're able to upgrade and scale up their network as they grow without disrupting their customer traffic," said Miller. "It's one of the main selling points for Juniper."

Cisco did not respond to a CRN request for comment by publication time.

Chris Becerra, president and CEO of Terrapin Systems, a San Jose, Calif.-based solution provider and Juniper Elite partner, said Juniper's flexibility and openness are resonating with service providers, demonstrated for example in its recent unveiling of a disaggregated version of its flagship Junos solution.

"Separating the hardware from the software is a message that especially resonates with the service provider, because the customer sees Juniper as being a lot more flexible in the whole self-programmable capabilities than Cisco, who is going down their own track," said Becerra. "Customers still might see that as a proprietary vision and track, versus Juniper, [which has] always been open standards."

Becerra said customers want more openness in order to be able to put together a service with the newest technologies, such as software-defined networking (SDN), which differentiates itself from the competition.

"Service providers are much more open and interested to looking at SDN and open networking solutions, because they really feel they can derive value from those types of solutions right now that's going to differentiate their service from the other providers and competitors," said Becerra. "Where[as] in the enterprise, it's a little bit more conservative and non-embracing of technology."

Over the past three quarters, Juniper has been gaining more market share in the U.S. service provider market, while competitors like Cisco and Alcatel-Lucent have lost share or remained flat.

"You have to call it a pretty consistent trend now," said Synergy's Dinsdale. "But let's remember that Cisco is still the dominant player."

Cisco is not losing share without a fight. On the routing front, the networking leader last week unveiled improvements to its software and routing via enhancement of the company’s IOS XR software, and also introduced three new products in its Network Convergence System routing lineup.

The new routers, software and developer tools for cloud-scale networking enable service providers and Web companies to deliver cloud applications with greater agility, automation and simplicity, according to Cisco.

Cisco's worldwide service provider router market share increased 1.4 percent over the previous quarter, thanks to strong gains in the APAC region and continued growth in Europe, the Middle East and Africa (EMEA), according to Synergy Research Group.

Looking at the worldwide service provider routing market as a whole, revenues were down 3 percent, to $3.3 billion, for the third quarter compared with the year-ago quarter.

Cisco owns about 44 percent of the worldwide market, followed by Juniper, which at 17 percent slightly outpaced Alcatel-Lucent, also at about 17 percent. China-based Huawei took fourth place, with 12 percent of the overall market.

Core routers accounted for 21 percent of all third-quarter revenues, while edge routers took 62 percent of overall sales. Ethernet access-aggregation devices captured 17 percent of the sales for the quarter.