Foundry Networks is making good on its promise to penetrate the service provider market this year. Sales of its switches/routers to service providers were up 39% sequentially and up 68% from a year ago in the third quarter. In North America, sales to service providers jumped 21% sequentially.

Having established itself in the enterprise and government markets, Foundry has been gaining attention among service providers since it introduced its NetIron XMR core router and MLX metro Ethernet switch last year — simple, fast, dense boxes sold at a fraction of the prices offered by Cisco Systems and Juniper Networks, which dominate the market.

Foundry's low prices (enabled, the company said, by cost reductions at the component level not available to older products, as well as sharing common parts with its enterprise gear) are a natural fit for cost-conscious second- and third-tier carriers. But the vendor reported a Tier 1 customer in the third quarter in keeping with a promise made early this year by Bobby Johnson, CEO of Foundry, for “major Tier 1 penetration” starting in the second half of 2007. New 32-slot versions of Foundry's gear only started shipping two weeks before the third quarter ended, implying continued acceleration going forward.

The company introduced packet-over-Sonet cards this spring to help tie together carriers' legacy networks with their Ethernet overlays, but even still, analysts say the vendor will have a hard time winning over top-tier carriers with the limited MPLS functionality of its products. Last year Foundry placed sixth in terms of global market share behind Cisco, Juniper, Alcatel, Redback (now Ericsson) and Avici Systems, which exited the router business in 2007.

Foundry drove hard at service providers this year after focusing on enterprise and government customers in the wake of the telecom crash. Service providers now represent 25% of the company's business.

YEAR-OVER-YEAR REVENUE GROWTH OF FOUNDRY'S SERVICE PROVIDER SEGMENT