WSJ. Juniper's New-Router Shipments Kick Off Race in Internet Devices
September 16, 1998
By LEE GOMES
Staff Reporter of THE WALL STREET JOURNAL
A closely watched Silicon Valley computer networking company has
shipped its first product, kicking off a race to provide the next generation
of the Internet connection devices known as routers.
Juniper Networks Inc. of Mountain View, Calif., said that its new M40
router is at least 10 times as fast as the speediest devices from such
industry leaders as Cisco Systems Inc. Juniper's devices cost hundreds of
thousands of dollars each, and are meant to be used by
telecommunications companies, Internet service providers and others along
what is called the "backbone" of the Internet.
Routers help transmit information through computer networks, and
ever-faster routers are viewed as a key to allowing the Internet to continue
growing. And they are considered especially important if the Internet is to
transmit voice and even video signals, as is now beginning to occur.
Broad Backing
Juniper is being closely followed because many of its engineers are from
Cisco, and because it has attracted backing from a number of prominent
companies, including AT&T Corp., Lucent Technologies Inc., Northern
Telecom Ltd., 3Com Corp. and Worldcom Inc.'s UUNET Technologies.
Juniper is also getting help from International Business Machines Corp. in
the design of the specialized chips it uses inside its routers.
Those investments in Juniper were seen, in large part, as defensive moves
against Cisco's growing market power. Cisco's market share in Internet
routers, for example, is estimated at nearly 70%, and it is developing
routers that can also carry digital telephone calls over the Internet.
Cisco said it hadn't any comment on Juniper's new product.
Juniper created a considerable buzz in networking circles when it disclosed
its plans last year. Since then, though, the market for superfast routers has
become a very crowded one, as a number of other start-up companies
have announced plans for their own devices, some of which are promised
to be even faster than Juniper's. Indeed, some of Juniper's backers,
including Lucent and Northern Telecom, are hedging their bets by
developing their own products in-house, or by also investing in other
start-ups. There was also concern that Juniper was late with its product
development.
Devices Are Evaluated
Tuesday, Juniper's chief executive officer, Scott Kriens, said that UUNet
as well as WorldCom's MCI Communications Corp. unit were evaluating
its devices. He also said his company, in contrast to competitors that are
still in the planning stages, is prepared to ship its routers in volume.
While superfast routers are expected to proliferate over the Internet,
industry analysts say companies like Juniper may find it a tough go in
competing against the likes of Cisco or Ascend Communications Inc.
Those companies often win sales not because their products are the
fastest, but because of the high-level ties they develop with big accounts.
"It's very hard to penetrate this marketplace," said Nick Lippis, of
Strategic Networks in Rockland, Mass. "The big players can do a lot of
creative things to limit your growth."
What's more, Cisco and the others can easily buy one of the start-ups, as
they have often done before. Indeed, Cisco Tuesday said it would acquire
closely held Clarity Wireless Corp. of Belmont, Calif., a maker of wireless
communication equipment, for $157 million in stock.
Mr. Kriens said, however, that the Internet is growing fast enough to
provide market opportunities for established players as well as new
companies like his own. "This is not a zero-sum game," he said.
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