Ethernet, a technology developed originally for LANs, is emerging as a major driver of telecommunications networks. As a result of service provider demand, the total metropolitan Ethernet equipment market will increase from $837 million in 2002 to $4.4 billion by the end of 2007, representing a 39 percent compound annual growth rate over the next five years, according to a new report from IDC entitled "Worldwide Metro Ethernet Equipment Forecast and Analysis, 2003-2007."

"The metro Ethernet equipment market is an enormous opportunity for vendors," said Sterling Perrin, senior research analyst in IDC's Optical Networks program. "Revenue and growth will be substantial and should attract the attention of any large telecommunications and networking suppliers looking for growth opportunities over the next five years."

Although service provider capital constraints will continue to pinch the overall telecom market, metro Ethernet will grow strongly, driven initially by large consumer services in Asia/Pacific. Business-oriented services in North America and a mix of business and consumer-oriented services in Europe will also drive deployments, but IDC believes that by 2007 more than 60 percent of revenue will come from Asia/Pacific.

Contributing to revenue will be a mix of optical and datacom equipment including metro DWDM, SONET/SDH MSPPs, layer 2/3 switches and routers. IDC finds, however, that layer 2/3 switches will command the largest slice of the revenue pie, at 48 percent of total revenue in 2007. With 7 percent of total revenue in 2007, metro DWDM will be the smallest revenue contributor.

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