Cisco, which competes with Juniper (NYSE: JNPR) the business of networking equipment, recently announced a new generation of core routers called CRS-3. Routing Carrier System 3 (SRC-3) will be able to offer data transmission speeds of up to 322 Terabits per second, much higher than the current core routers.
Routers are central to Internet service providers
based routers, such as the CRS-3 routers are more advanced in comparison to the most widely used enterprise and edge routers. core routers are designed to be used in the backbone (or core), operated mainly by large Internet service providers (AT & T (T), Verizon (VZ)), to direct Internet traffic data from the edge routers that are closer to the point of data delivery (house, office).
Business Routers Only 15% of the shares of Cisco
We estimate the router business is only 15% of the estimated $ 23 price of the shares of Cisco routers Trefis that plants are a small fraction of this tax. For example, we believe that Cisco will earn about $ 1.4 billion in core routers (such as SRC-3) in 2010 compared to $ 3.2 billion enterprise routers and U.S. $ 2.5 billion edge routers.
We then discuss how SRC-3 is designed to help network operators (AT & T) to manage volumes of data explosion of the Internet and how the success of SRC-3 may help Cisco maintain its lead in market share within the $ 2,500,000,000 core router market.
Explosive growth of Internet data networks promote improved
Internet data, consisting of audio, video, images and text, has grown rapidly in recent years due to the increasing prevalence of broadband and increased use of devices such as smartphones. For example:
1. AT & T network traffic increased by 40% in 2009 alone
Smartphone data usage will only increase the pressure on existing networking. Cisco estimates that global mobile traffic will grow at an annual rate of approximately 108% over the next five years
2. Global IP traffic expected to grow at an annualized rate of about 40%
With increasing video traffic over the Internet and 3-D content to be launched soon, the demand for bandwidth continue to increase. Cisco estimates global IP traffic will grow at an annualized rate of about 40% over the next four years.
The new technology helps Cisco Router Market Share Lead Store
New technologies such as router CRS-3 may help Cisco maintain its competitive advantage in the router business. Cisco’s market share in the main market router 2.5 billion U.S. dollars has increased from 40% in 2005 to over 50% in 2009.
We believe that gains in market share will remain flat at 54% in the period considered Trefis period due to increased competition from Juniper router makers, Alcatel-Lucent and Huawei.