ALCATEL GAINS IN EDGE MARKET

Alcatel's dramatic third-quarter advance in the edge router market changed the dynamic of a sector dominated by Cisco Systems and Juniper Networks. But it also illustrated the increasing difficulty of competing in — or even defining — a market served by a complex mix of Layer 2 and Layer 3 technologies.

Alcatel reported $89 million in revenue from third-quarter sales of its 7450 and 7750 edge products, both of which came from its TiMetra acquisition. According to Synergy Research, that pushed Alcatel's share of the edge router market up 150% sequentially to about 15%. Some dispute Synergy's interpretation, however, since half of that revenue came from a product that's not a router.

The 7450 is an Ethernet aggregation switch. If it counts toward a share of the edge router market, Cisco marketing director Suraj Shetty argued, then so should Cisco's 6500, 4500 and 3750 switches, for example, which Synergy excluded. Some analysts agree, including IDC and Dell'Oro, which don't count the 7450 in the router category. “One [product] is forwarding locally, one is forwarding across the LAN,” said Eve Grilliches, IDC analyst.

Ray Mota, a Synergy Research analyst who co-wrote its recent edge-routing report, argued that categories are defined more by customer application than technology. “I spoke to 30 service providers,” he said. “In about 70% of cases, the 7450 product is being deployed as a router solution competing with the [Cisco] 7600.”

Merrill Lynch analyst Tal Liani seemed to concur, adding, “In all the [requests for proposals], the demand is for a router.” Liani attributed Alcatel's recent success to the decidedly multiservice focus of the TiMetra gear, which he said has better legacy features than both Cisco's 12000 series or Juniper's M320.

With those two products, Cisco and Juniper took “shortcuts” to the multiservice edge, Liani said, adapting existing core routers for the edge. Alcatel is also leveraging its strength in the access market to win edge deals, he said, just as Cisco may hope to use its Scientific-Atlanta acquisition to leverage its growing presence inside the home.

Debates like the one over the 7450, though not new, are getting louder. By most accounts, categorizing routers and switches is getting harder as carriers convert legacy networks into aggregation networks based on multiprotocol label switching and Ethernet, with varying mixes of switching and routing functions.

“These products can be deployed in many ways with those functions turned on or off,” said Shin Umeda, Dell'Oro analyst.

“It's getting harder every year to classify them,” said Dave Bolland, Juniper's net-gen solutions manager. “The lines are blurring. Plenty of times Juniper has been in a competitive situation with what was traditionally a Layer 2 Ethernet switch with routing capabilities bolted on to it.”

And classification may not be Juniper's biggest concern in those competitive situations. Though the vendor isn't losing market share, its edge routers have been criticized for being weak on Ethernet functions, leaving it vulnerable to the kind of switch/router combination Alcatel is selling. In that way, the same technological complexity making this sector harder to categorize is making it harder to compete in, too.

In the end, even researchers at IDC and Dell'Oro, who disagree with Synergy's taxonomy agree with its most recent conclusion: Alcatel, using its own mix of Ethernet switching and routing, is aggressively gaining share in the edge router space and likely will become a major third player in a market now dominated by only two.