The Juniper v. Cisco Winner? (Nortel) .. Interesting article (and site)
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The Juniper v. Cisco Winner? (Nortel)
Fayad Abbasi
Mar 29 2000
Juniper [JNPR] recently announced it has a network router, the M160, which blows away the existing network routers, including Cisco?s [CSCO] flagship router. While we admit to being impressed with the speed gain and agree that Juniper will capture some business away from Cisco, the future of the center of the network lies in the optical realm. We still have a buy rating on Cisco but do not have a recommendation on Juniper.
Cisco is estimated at controlling about 85 percent of the router market. However, with competition from Juniper on the router front, by the end of the year, it should have a smaller market position. The battle today is over who can produce the fastest router. With the acquisition of Cerent, Cisco has the technology to regain the lead in the router market. Nonetheless, a migration to optical switches, such as those Nortel [NT] is very busy trying to acquire or develop, will allow for management of the center of the network in photonics. The biggest problem with transmission in the core is that currently, information must switch from an optical signal to an electrical signal so that the router can determine where that information needs to go. However, with optical switches, the need to convert to an electrical signal is eliminated and thus a major bottleneck in transmission speed.
Within a year or two, widespread deployment of optical switches will be more prevalent. Currently, our favorite company in that space is Nortel. However, many companies are looking to develop products in that realm as well.
Fayad is a semiconductor analyst for StreetAdvisor.com. As a full-time employee of StreetAdvisor.com, Fayad is prohibited from actively trading individual stocks, options, and bonds. As per company policy, Fayad has not opened a new position in a stock since February 1, 2000.
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