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Tuesday, May 22, 2012

New Alcatel-Lucent Core Router Intensifies Competition

Alcatel-Lucent announced a new family of core routers, the 7950 XRS. They provide an integrated P-Router and Label Switched Router (LSR) solution with high port and slot density per chassis to deliver increased scale and higher efficiency to meet the requirements of 100G configurations. The 7950 XRS-20 will be the first product to ship (2Q2012) and features 20 system slots with 400 Gbps per slot capacity. The 7950 XRS-20 can be upgraded to the 7950 XRS-40 model, which doubles the number of slots and only requires an additional multichassis system shelf when three or more chassis are combined in a single node.

The new Alcatel-Lucent core router is designed to address the significant cost pressure on network infrastructure caused by high traffic growth rates and the failure of service providers’ revenues and profits to keep pace. Core network traffic is growing in excess of 50% per year, and new services such as content-rich digital media, cloud and mobile broadband place new requirements on the network for optimal distribution and delivery. Core routers, consequently, must scale rapidly and meet demanding network performance objectives with the lowest possible total cost of ownership (TCO). 

The 7950 XRS addresses the challenge to reduce TCO by featuring high port densities and the integrated P-Router and LSR solution. High port densities produce better scaling of capital and operations expense. In particular, network operations expenses that are not easily controlled by network operators such as space and power are reduced because fewer chassis and network elements are required. The integrated P-Router/LSR solution also helps to control cost by flexibly supporting optimization of higher cost IP routing versus lower cost label switching.

Alcatel-Lucent’s entry into the core router market will not be easy since Cisco with 62% market share and Juniper with 33% share hold a virtual market duopoly. Incumbency just as in politics provides substantial competitive advantages. There are few Greenfield deployment opportunities so new entrants must be compatible with the incumbents’ routers. Furthermore, the strategic nature of the network core strongly favors the well known incumbent over the unknown new entrant.

Alcatel-Lucent has a strong cost control business case to support its entry into the core routing market. We analyzed the TCO of the 7950 XRS core router and other leading core switch/router solutions when deployed on a simulated large core network subject to high traffic growth rates. We found that the OpEx of the 7950 XRS is 43% to 56% lower than the competitions’ core router solutions. Capital expense also is lower by 22% to 26%.

Although Alcatel-Lucent has tough competitive battles ahead in attempting entry into the core router market, it strong cost based business case and incumbency in the adjacent edge router market will most certainly intensify competition.

To download the Alcatel-Lucent TCO, click here.

To watch the HotSeat video of Ray Mota and Basil Alwan, discussing the 7950 XRS core router click here.

For more information about ACG Research's Business Case Analysis service, click here or contact

Michael Kennedy

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