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Technology Stocks : AVICI: Darkhorse Winner

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To: Freeflight who started this subject1/3/2003 2:33:55 PM
From: Freeflight   of 5
 
Can Dell's switches team up with Avici or Juniper routers to complete a branch office solution? the old LAN in a Can or Branch office in a Box strategy?

Lightreading: Avici’s Incredible Shrinking Router — Marguerite Reardon, Senior Editor, Light Reading
www.lightreading.com

Core router vendor Avici Systems Inc. (Nasdaq: AVCI - message board;
Frankfurt: BVC7) has shrunk the size of its router again (see Avici Intros
Tiny Router ). This is the second time in two years the company has sliced
the size of its core router in half (see Avici Intros Tiny TSR ).

The new 10-slot QSR is half the size of the 22-slot SSR, which is half the
size of the 44-slot TSR, the original flagship Avici router. Lined up side
by side, the Avici portfolio looks like Russian Matruska dolls.

The company has also introduced some new hardware that will be used in all
three products. It’s now shipping its latest route processor module that
enables the nonstop routing function demonstrated at the Supercomm tradeshow
in Atlanta (see Avici Touts Router Reliability ). It has also introduced new
OC48 (2.5 Gbit/s) and OC192 (10 Gbit/s) line cards that double its port
density across its portfolio. And lastly, it will be shipping its new
10-Gigabit Ethernet module in the first part of next year.

With the new line cards and route processor, the QSR becomes a very
attractive option for carriers looking to conserve space and operational
costs in their points-of-presence (POPs). This is crucial in a market where
carriers continue to focus on reducing costs.

“To be successful in the core router market, you have to be able to offer a
wide range of products to fit the different requirements,” says Kevin
Mitchell, an analyst with market research firm, Infonetics Research Inc.
“And I guess the SSR wasn’t small enough for some customers.”

But a small footprint isn’t the only thing needed. With the prospect of
upgrading to 40 Gbit/s still in the distant future, carriers are looking for
better density on existing high-speed interfaces. Avici has answered this
call.

The new OC48 card has four ports instead of two, which means that it
supports 152 OC48 ports in a single QSR. The company has also finally shrunk
the size of its OC192 line card. While the card still only has one port, it
now fits into a single slot instead of taking up two. All told, the QSR can
accommodate up to 38 OC192 ports in the 10-slot chassis. Improving the OC192
card was crucial, considering that both Cisco Systems Inc. (Nasdaq: CSCO -
message board) and Juniper Networks Inc. (Nasdaq: JNPR - message board) have
already been selling OC192 cards that fit into one slot.

The new route processor is also crucial for saving space and operational
costs. Avici’s nonstop routing function improves routing reliability to the
point where carriers don’t need to deploy a second router for redundancy.
Alcatel SA (NYSE: ALA - message board; Paris: CGEP:PA) has already announced
a similar approach to router reliability (see Alcatel Debuts Non-Stop
Routing ). Cisco and Juniper offer a similar feature they call nonstop
forwarding.

“Router reliability is a hot topic with router vendors and carriers,” says
Mitchell. “It’s really the ‘secret sauce’ of routing. Right now everyone has
their own approach, but I’m sure it will be standardized so that routers
from different vendors can talk to one another.”

Mitchell adds that built-in router reliability is still in its early days,
and it will take time before carriers trust it enough to stop deploying a
standby router in the core.

All of these improvements are important differentiators for Avici, which for
the past three years has struggled to win market share. In the third quarter
of 2002, the core router market was $306 million, according to Infonetics
research. Cisco had 76 percent, Juniper 16 percent, and Avici came in with 2
percent.

Most likely the QSR will compete against the GSR 12406 from Cisco and the
T320 from Juniper. These routers are all comparable in size and capacity.
For example, the 12406 chassis fits in one quarter of a seven-foot rack and
has a forwarding capacity of 60 Gbit/s. The T320, which has 160 Gbit/s of
capacity, fits in a third of a seven-foot rack. The QSR is also a quarter of
a rack high and supports 100 Gbit/s worth of capacity.

But unlike these other products, the QSR is based on a scaleable
architecture. This means that multiple QSRs can be stacked together to
create a larger, single logical router. This is not the case with the
competing routers. To date, Cisco has not announced plans for a scaleable
router. While Juniper’s larger T640 was designed to scale in this way, the
T320 was not (see Juniper Shrinks Its SuperCore Router ).

“A lot of our customers, particularly those in Asia, don’t think they will
ever need the capacity of a large core router,” says Esmeralda Swartz,
director of strategic marketing. “But they want the insurance to grow beyond
that just in case.”

Avici says that it has already recognized revenue on the QSR but has not
named customers yet. It says that it has been testing the gear with current
customers. So far it has announced AT&T Corp. (NYSE: T - message board),
France Telecom SA (NYSE: FTE - message board), and Chunghwa Telecom Co. Ltd.
as TSR customers. Qwest Communications International Inc. (NYSE: Q - message
board) and Global NAPs have deployed the SSR. And the United States
Department of Energy has deployed both the SSR and TSR.

Avici’s stock was down $0.14 (3.79%) to $3.55 in afternoon trading.

— Marguerite Reardon, Senior Editor, Light Reading
www.lightreading.com
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