News Analysis: Net investors feed on Juniper berries

Startup?s partners hopes to topple Cisco from internet throne with next-generation router

The advent of the internet as a mainstream business technology initially spelled euphoria for the established networking vendors, which suddenly had a market with seemingly limitless growth potential. Cisco, leader of the router market, in particular benefited from the expansion of the Net out of its academic heartland.

Growth in internet usage will be the main driver, pushing sales of standalone routers up by 90 per cent over the next five years, according to research by Frost & Sullivan. The firm estimates this market will be worth $3.3 billion by 2003.

But the downside for networking firms is that the internet is also provoking a shake- out in the wide area networking market. Internet startups are attacking their ground from one side, while telecoms equipment makers are moving in from the other. For the first time in years, the corporate networking infrastructure is becoming a free for all.

As usual, small firms will be pawns in the giants? battles. Last week, privately held start-up Juniper Networks revealed plans for a next-generation router that promises to alleviate internet bottlenecks ? along with $40 million from telecoms heavyweights that are aiming to grab a slice of Cisco?s cake.

Ericsson, Northern Telecom, Siemens/Newbridge and internet service provider Uunet all joined Cisco?s arch-rival 3Com in placing funds and technical support behind Juniper.

Juniper chairman Scott Kriens said: ?The explosive growth and use of the internet is causing traffic bottlenecks, quality issues and performance constraints. This is creating a whole new class of datacommunications devices.?

Kriens is basing his plan to take on Cisco on the premise that voice and data networks suppliers are rapidly converging on the internet. He claims current data network equipment such as conventional routers are unable to scale up to meet the demands of superfast traffic carried by fibre optic networks.

As ISPs start to behave like telephone companies ? charging according to time of day and reliability of service, but guaranteeing almost constant availability ? a different class of network equipment will be needed, said Kriens. Although there are few technical details available yet, Juniper promises a traffic controller that handles voice and data as well as sending out bills to subscribers.

Richard Palmer, director of product marketing at Cisco, claimed it has been working on such a device for two years, and billing capabilities will be an option with its own routers. But he recognises that the rest of the industry has spotted an opportunity to knock the giant off its pedestal. But, he insisted: ?The partners that have invested in Juniper have realised they?d better hustle if they are going to catch us up.?

Juniper may have thrown some of the competitive issues arising from the growth of the Net into sharp relief, but it is certainly not the only startup looking for a share of Cisco?s market, and many of these are attracting significant backing from established vendors and from venture capitalists.

A record period for investment in the US was driven by internet startups, according to Price Waterhouse figures for the quarter ended in June. In that time, investments rose by 14 per cent, even on a previous quarter, reaching $3.2 billion, with technology accounting for the whole of that increase and for $2.3 billion of the total. Within that, internet-related companies doubled their funding to $561.5 million.

But the analysts warn network managers not to get carried away with the hype. While vendors battle for turf in the internet market, promising standards, speed of access and secure links, the technology is still new and unproven and users should be cautious.

Issues such as efficient user tracking and administration have not yet been fully addressed. So while the market may be a free for all right now, the channel would do well to wait until the dust settles a little more before deciding which camp to follow.