Cisco on Tuesday overhauled its Integrated Services Routers (ISR G2) family for the first time since the flagship products were launched five years ago. The second-generation routers have been rearchitected to address the network demands associated with the expansion of video and on-demand computing services, as well as the increase in branch offices.

For channel partners, Cisco is touting a massive market opportunity that includes router upgrades, migrations and net-new business.

“Right now, you have a $10 billion market for routers, and half of it is an installed base with the majority of them needing a refresh,” said Wenceslao Lada, vice president of worldwide channels for Cisco’s Borderless Networks Architecture, in describing the partner opportunity around the new lineup.

The routers are aimed at the market for branch office networking. The company cites Nemertes Research, which puts the average annual growth of branch offices at more than 9 percent between 2004 and 2008. By 2010, the proliferation of branch offices globally is expected to increase by 17 percent.

But these offices are often “networking islands,” according to Cisco, with subpar connectivity back to data at the main office. With the new routers, Cisco is trying to address scalability, availability and performance issues across non-IT-managed remote locations, according to Shashi Kiran, senior manager of network systems and security at Cisco.

“We are really architecting this platform from the ground up into branch offices,” Kiran told Channel Insider. “Customers can remotely deploy all of their services, unified communications, wireless LAN, etc., and have them all managed on this single-router platform.”

The new architecture decouples hardware from software so that application services can be added quickly and dynamically when needed and do not need to be ported when the hardware is replaced, Kiran explained. The Cisco Service modules feature virtualized services and software for branch offices that can be centrally deployed and managed inside a small, router-integrated footprint as well.

The major application that Cisco is looking to support with the new routers is video. The new routers series includes hardware and quality-of-service enhancements aimed at improving the video experience, Kiran said. There is no question that video is becoming more and more ubiquitous in business settings, following the lead of the consumer space. By 2012, analysts predict that 90 percent of consumer Internet traffic will be video, for example.

From a partner enablement perspective, Cisco is pushing the new ISR G2 family aggressively. The company has trained 1,000 partners on the routers thus far. More notably, Cisco has expanded its Opportunity Incentives Program (OIP) to include routine routing and switching deals for the first time. Partners are eligible for up to 15-point rebates when selling solutions in the OIP program.

Cisco’s launch comes just as rival Juniper is getting set to hold what it is billing as its most significant event in 12 years in New York next week. The company is expected to unveil new hardware and software products, new partnerships, and new go-to-market programs. Meanwhile, Cisco’s closest rival, HP ProCurve, recently rolled out a series of new offerings that combine the company’s networking switches with other data center infrastructure, including HP’s blades.