INSIGHT
SERVICE PROVIDER ROUTER MARKET FORECAST Service provider core
$1.5
Service provider edge
CARRIER ETHERNET ROUTER MARKET FORECAST $0.8
$0.0
4Q07 1Q08 2Q08 3Q08 4Q08 Calendar year
1Q09 2Q09 3Q09 Source: Dell’Oro Group
EDGE ROUTER SALES OUTPACING CORE ROUTERS Service providers have given investment priority to edge networks over core networks over the last five quarters. According to Dell’Oro Group’s 3Q09 Routers report, edge routers accounted for a record-level 69% of the service provider router market, while core routers accounted for the remaining 31%. This is largely due to the allocation of larger portions of service providers’ IP network spending to edge routers that enable revenue-generating services. Although service providers continue to expand their core networks, most investments are for incremental upgrades focussed on managing traffic growth rather than large-scale projects to implement new technologies or network architectures.
TOP ETHERNET SWITCH VENDORS BY Q4 2009 REVENUE Cisco
$0.0
4Q07 1Q08 2Q08 3Q08 4Q08 Calendar year
1Q09 2Q09 3Q09 Source: Dell’Oro Group
According to the research firm’s 3Q09 Carrier Ethernet report, sales of carrier Ethernet routers experienced sequential growth for the second consecutive quarter in 2009. Since declining 19% in Q1 2009 due to the faltering global economy, demand for carrier Ethernet routers has rebounded steadily. Carrier Ethernet routers, which represent the cornerstone technology for many growing services such as IPTV, business VPNs and mobile transport, are on track to establish record sales levels over the next two or three quarters, and have become the technology of choice in service provider edge networks, accounting for more than 60% of all edge router sales, according to the research firm.
GLOBAL ENTERPRISE ROUTER REVENUE $5
D-Link Nortel Other 3Com / H3C HP ProCurve Source: Infonetics Research
ETHERNET ENTERPRISE ROUTERS AND WIRELESS LAN EQUIPMENT REBOUND The Ethernet switch, enterprise router, and wireless LAN equipment markets have improved from the lows set in the first half of 2009, but are still down overall in 2009 compared to 2008, according to Infonetics Research. With the economic recovery under way, Infonetics expects sales to rise across the board in 2010 and beyond as companies make necessary infrastructure investments and slowly expand again. The Ethernet switch market had a strong rebound in Q4 2009,
growing 15% sequentially to $4.2 billion, according to Infonetics. On a year-over-year basis (Q4 2008 to Q4 2009), Ethernet switch port shipments are up 4%. Demand for new Ethernet switches continued in 2009, but buyers migrated to lower cost switches, which hurt revenue.
$0 2009 2014 Source: Infonetics Research
In Q4 2009, sales in the important chassis switch segment, a large revenue contributor due to their high price tags, showed the highest sequential growth, according to the research firm. Similarly, global enterprise router revenue had strong sequential
growth in Q4 2009, up 10% from the previous quarter to $821 million while global wireless LAN equipment revenue held steady in Q4 2009 from the previous quarter, at $571 million.
FACT
Despite taking a dive along with the rest of the market in Q1 2009, the 10G Ethernet switch segment recovered well, with worldwide revenue growing 63% in 2009 over 2008, according to Infonetics Research.
Capacity’s Carrier Ethernet Business Briefing
43
Revenue ($ billion)
Revenue ($ billion) Revenues (billions)
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