Around one-third of Juniper’s (NYSE:JNPR) stock price can be attributed to the company’s router business. Juniper has about 25% market share in core routers. The company faces challenges from router competitors like Cisco (NASDAQ:CSCO), Tellabs (NASDAQ:TLAB) and Alcatel-lucent (NYSE:ALU). Despite these challenges, we expect Juniper’s router share to increase over our forecast period.
We currently have a Trefis price estimate of $24 for Juniper’s stock, about 14% below the current market price of $28. Below we highlight the historical and future trends for Juniper’s market share in core routers and edge routers.
Juniper Market Share in Core Routers
The core router market has been the primary focus of Juniper’s efforts ever since its inception. Juniper quickly captured market share in the early part of the decade and peaked at a market share of more than 35% in 2004. However, its market share decreased from 30% in 2005 to 25% in 2009 due to stiff competition from Cisco’s CRS-1 series routers.
Although Cisco is the market leader in routers, Juniper’s products enjoy good brand recognition with service providers, particularly its T-Series line of products. We expect Juniper’s share to be rise above 30% by the end of Trefis forecast period.
The average of Trefis member forecasts for Juniper Market Share in Core Routers indicate an increase from 27% in 2010 to 32% by 2016, compared to the baseline Trefis estimate of an increase from 26% in 2010 to around 30% by the end of the Trefis forecast period. The member estimates imply an upside of about 1% to the Trefis price estimate for Juniper’s stock.
Juniper Market Share in Edge Routers
While Core routers are used by telecom operators and internet service providers to route large volumes of internet traffic through the main arteries of the internet, edge routers are used to distribute the traffic to the end recipients (at the “edge” of the network). Juniper’s edge router market share touched an all time high of nearly 20-22% in 2003-04. However, the company’s market share has declined substantially to around 13.5% in 2009, primarily because of Cisco’s introduction of new product lines and Juniper’s failure to radically upgrade its products.
The average of Trefis member forecasts for Juniper Market Share in Edge Routers indicate an increase from 14.5% in 2010 to 17% by 2016, compared to the baseline Trefis estimate of an increase from 14% in 2010 to 16% by the end of the Trefis forecast period. The member estimates imply an upside of 1% to the Trefis price estimate for Juniper’s stock.
