ROUTER: It's Cisco All the Way

Driven by purchases from both service providers and enterprises (including
SMEs), the Indian router market grew substantially in 2004-05. As in the
previous years, the market was overwhelmingly dominated by Cisco. According to
VOICE&DATA estimates, different vendors sold routers worth around Rs 860.5
crore in 2004-05 as against Rs 634 crore in the year before. This was around 36
percent year on year growth. Incidentally, in 2003-04 also the market grew on a
similar rate. While the market for high-end routers grew on account of major
broadband and MPLS network deployments by leading service providers including
BSNL and MTNL, the market for the mid and low-range routers was driven by huge
IT adoption in the enterprise segment across almost all verticals.

Market Trends

As in the year before, there was a significant built out of MPLS networks by
both service providers and enterprises. MPLS enhanced an operator's ability to
offer managed network services to its customers. Almost all the service
providers who had deployed MPLS in 2003-04 took it to a new level or started the
process. BSNL, which was the first to roll out MPLS in 2002-03, took it to new
destinations covering almost the entire country including Leh and Port Blair.

On
the other hand, Bharti, which had earlier deployed MPLS backbone solution based
on Cisco 12000, 10000, 7300 and 7200 series routers, is now the process of
deploying a new IP/MPLS next-generation service network based on the Cisco 7600.
The Cisco 7600 edge-aggregation routers, equipped with the new Supervisor Engine
(SUP720-3BXLs), are being used for L2/L3 VPN aggregation including Ethernet over
MPLS, and FR over MPLS. Bharti has also been evaluating the new Shared Port
Adapters (SPAs) and SPA Interface Processors (SIPs) for its Cisco 7600 routers.
Reliance Infocomm launched MPLS global VPN service in association with MCI. MCI
installed MPLS network nodes in New Delhi, Mumbai, and Bangalore for delivering
seamless access to its global private IP network throughout India using
connections to the nationwide Reliance Infocomm MPLS VPN network.

A number of large enterprises migrated to MPLS VPN or prepared to migrate to
one. Banks with their multiple location businesses spread across hundreds of
towns and cities across India were one of the prime movers of VPN deployment.
State Bank of India, United Bank of India, and Bank of India were among the
banks that drove the VPN deployment.

Vendors

Cisco continued to lead the market with around 84 percent of the Indian
market. Juniper was a distant second. D-Link, Dax Networks, Nortel, Multitech,
Huawei and 3Com were the other vendors active in the Indian market.

Cisco saw a significant increase in its router business past registering a
growth of 34.5 percent. The growth came from both service provider and
enterprise segments. In a significant move, the vendor introduced a new range of
what it called Integrated Services Routers aimed at both large enterprises and
SMBs. These new Cisco 1800 Series, Cisco 2800 Series, and Cisco 3800 Series
integrated services routers were aimed at providing the customers with an
infrastructure that enables fast, secure access to mission-critical business
applications with optimized security.

The vendor introduced its breakthrough CRS 1 in the Indian market in June
2004. However, CRS-1 failed to find any takers among Indian service providers.
The router, which has seen several deployments globally, appears to have come
too early for the Indian market. The system capacity of 92 terabits per second
seemed too much for Indian service providers. However, Cisco continued to
fortify its presence in the service provider space in India. In this segment,
one of the major deals that involved router deployment was the Metro Ethernet
solution for Tata Indicom Broadband Services. Cisco's Metro Ethernet solution
is based on the Cisco 12000, 7600, and 7300 Series Routers.

Juniper got orders from Railtel and BSNL. RailTel Corporation of India
selected Juniper's M-series multi-service edge routing platform deploying MPLS
network. The project is for installation of M-series platforms in 38 cities in
the country.

Efforts by vendors like Dax Networks, who tried to take the alliance route to
take on the market leader, didn't work much. However, it did help DAX
Networks, which succeeded in growing its router business by more than 100
percent during the year. It has a tie up with Maipu Communications and has also
sewed up an alliance with Telco Systems for carrier-grade routers. BSNL,
Railways, and HDFC Bank were among the leading customers of DAX Networks.

Outlook 2005-06

As both enterprises and service providers both build capacity and expand
their networks to support growing demand for communications and networking, the
router market would continue to grow significantly. Service provider deployments
are likely to grow primarily on account of their current focus on data services
for enterprises and broadband. On the other hand, IT is becoming strategic for
enterprises who are increasingly facing domestic and global competitive
pressure.

Richness of features, and high levels of flexibility and scalability would be
most sought after in routers by the service provider and enterprise segments.
And it is because of a better ability to offer these that Cisco would continue
to rule the market. Even though Juniper also offers feature-rich routers with
high levels of flexibility and scalability, the vendor would need some more
aggressive presence in the Indian market.

Other vendors would have to be satisfied with the lower end of the market.
However, they should watch out for Cisco's increasingly aggressive positioning
in the SMB space as well as the fact that SMB segment has also started looking
for more in its routers. The market leader has already started the year on an
aggressive note launching a new series of wireless-enabled integrated services
routers.

Ravi Shekhar Pandey