ROUTERS: Year of the King

As has been the case in the past, Cisco continued with its over-whelming
dominance of the router market across all segments during FY 2003—04 in India.
Its only real competitor was Juniper, that too only in the service provider
space where the two vendors vied for the first phase of MPLS deployment. Some of
the other vendors in the market were Nortel, D-Link, and Multitech besides Dax
Networks and the new entrant 3Com. While Cisco and Juniper shared the service
provider market for routers, others were active in the enterprise segment.

In the enterprise space, past-year solutions that integrate LAN and WAN
connectivity along with other features such as manageability, security and the
ability to provide voice, video, and data on a single platform gained a
significant acceptance across mid- and large- sized companies. Routers,
especially from Cisco, were packed with more features, better optimized QoS and
more security capabilities like firewall, IP Sec and encryption. It also added
more than 100 features in its IOS. Cisco positioned its routers as a smarter and
faster networking tool.

Routers are now longer lasting too unlike the case earlier when they needed
to be replaced every one-year or two. Thus, they offered better investment
protection, scalability, manageability, and also backward compatibility. In
fact, these features were key to the 37 percent growth that the routers business
(both enterprise and service providers) registered in FY 2003—04.

While pricing was the key strategy for vendors in the low-end of the market,
market leader Cisco saw only a marginal dip in the prices of routers that it
supplied to enterprises. As it added more functionalities and power its routers,
it even charged a premium.

As per VOICE&DATA estimates, the Indian router market in FY 2003—04 was
to the tune of Rs 634 crore. With 85 percent market share, Cisco registered a 35
percent growth in its router business. While in FY 2002—03 Cisco's router
business was worth Rs 399 crore, it ended FY 2003—04 with Rs 540. At more than
30 per cent, routers were the largest portion of Cisco's business in India.
The second ranked was Juniper, known for its high-end routers for service
providers. By VOICE&DATA estimates, Juniper would have done a business of
around Rs 60 crore in FY 2003—04.

As companies across India continued to make their initial investments in
networks, Cisco's mid-range 3700 remained the vendor's bread and butter. In
the lower end, Cisco had 1700 series modular router and the 2600 series high
density mid-range modular router on offer. Other router models that it sold in
FY 2003—04 included 4000, 7000 and 7200, and 7300 that was introduced last
year only.

Among the deals in the enterprise space, Cisco deployed the 1700 series, the
2600 series Router, 2950-24 Switch and the 3600 series Multi-service Platforms
at the Federal Bank' head office and regional offices. Among the router models
that Cisco introduced past year was the Cisco 12800 router, supposedly, the
industry's only field upgradeable solution that scales from 2.5Gbps/slot to
40G/slot capacity. Additional Cisco 12000 Series enhancements included: high
density OC-192/STM-64 and OC-48/STM-16 interfaces, new 2.5G/slot chassis that
can be software key upgraded to 10G/slot, an OC-3/STM-1 ATM interface, an
OC-12/STM-4 channelized interface for high density DS1/E1 services, and a new
performance route processor for increased route scalability and system
availability.

Two significant entries in the Indian router market in FY 2003—04 were Dax
Networks and 3Com. Dax Networks, which has been there in the router market for
sometime now, reworked its strategy after it entered into a JV with the Chinese
company Maipu Communications, in January 2004. The Dax and Maipu JV at present
has a mandate for three years in the Indian market during which the routers will
be co-branded as Dax-Maipu. Dax Networks is relying on the relatively low total
cost of ownership of Dax-Maipu routers to build a strong marker share and it
registered good growth in its router business last year. The company offers edge
and access routers mainly for the service provider segment. Maipu routers, which
were first tested by Dax Networks on BSNL networks in Hyderabad and Pune, helped
it emerge as the third largest vendor in the service provider segment after
Cisco and Juniper. The Chennai-based vendor more than doubled its router
business in FY 2003—04. While in FY 2002—03 Dax Networks sold routers only
worth Rs 5 crore, in 2003—04, its router sales stood at Rs 13 crore-a
whopping 160 percent growth.

On the other hand 3Com introduced its first routers in the Indian market in
August 2003 and over a period of time brought in seven more models. 3Com routers
were received well in verticals like the service provider, and banking and
finance besides in a mix of small and medium enterprises. The vendor is believed
to have won a fair number of small deals in routers since August 2003. In fact,
routers (besides its gigabit LAN core switch) helped 3Com regain some of the
sheen that it had lost in the previous years in the Indian enterprise networking
market. 3Com now has eight models of routers for enterprises in the Indian
market. D-Link mainly sold multi-service access routers in the enterprise
segment. Its router business was worth Rs 11 crore in FY 2003—04.

In many ways MPLS was the flavour of the FY 2003—04 as far as carriers were
concerned with almost all of them completing the rollout of their first MPLS-enabled
networks. While in the previous year only BSNL had rolled out MPLS, FY 2003—04
saw almost all the private operators including Tata, Bharti and Reliance besides
Sify and Dishnet deploying MPLS. On the one hand service providers went for MPLS
because it enabled them to offer better QoS on IP as well as a more reliable IP-VPN
service, on the other hand MPLS also meant an enhanced ability to offer
multi-media convergence services. While it would still be some time before
operators who have deployed MPLS really actualize their returns on investment,
MPLS was perceived to be more operator friendly because of its ability to reduce
both capital and operational costs, scalability and flexibility and finally its
ability to help service providers roll out new services at an hitherto
unavailable ease. Cisco and Juniper clearly have an edge here.

VOICE&DATA estimates the market for high-end routers, that go into
building service provider IP data networks, would be around Rs 220 crore. Of
this, Cisco would be around Rs 160 crore and Juniper Rs 60 crore. Cisco also
clinched deals from operators in Sri Lanka and Bangladesh.

Among the significant deals won by Cisco in the service provider space was
one with Bharti Infotel. Bharti Infotel has deployed a Internet Protocol
(IP)-based MPLS backbone solution based on the Cisco 12000, 10000, 7300, and
7200 series routers and Cisco Catalyst 4500 series switches. Another significant
deal was with Dishnet (now acquired by the Tata group). Dishnet deployed Cisco's
12000 series routers at Chennai acquiring a capability to deliver voice and
video services, which require higher bandwidth. Similarly, Sify deployed an MPLS-based
network in India using Cisco Systems' 12000, 7600, and 7200 series routers.

Service providers will increasingly prefer their routers to offer high levels
of scalability and flexibility. In other words, routers must have an extended
life cycle and a reduced long-term and operational cost. That is why vendors
like Cisco and Juniper are not only adding more power, speed, and
functionalities in their new routers, they are also making them highly scalable.
A case in point is the Juniper Networks' M320 Multi-service Edge Platform,
which the vendor has positioned as a highly scalable edge-routing platform.
Going a step further more recently, Cisco launched CRS-1. The vendor is
positioning the new router (with a system capacity of up to 92 terabits per
second) as a core routing platform that would form the basis of its
carrier-grade router catalog for the next five to ten years. Cisco is looking
forward to a scenario where instead of replacing routers every five years or so,
carriers add new line cards and software modules to the CRS-1 to meet changing
demands and introduce new services.

Ravi Shekhar Pandey