A new survey from IDC shows significant quarterly declines in router revenues and a flat market for LAN switches. IDC says worldwide router revenues declined by 4.6 percent quarter to quarter. LAN switches were up by a nominal 1.4 percent.
Both router and LAN switch markets were down by more than 25 percent from the fourth quarter of 2000, which was the last strong quarter before the 2001 network equipment slump. Poor revenue results are due to the collapse of enterprise high-end router sales. Gigabit LAN switches are recovering, but still selling more slowly than had been expected. IDC expects the router market to flatten and both markets to level off until a gradual recovery commences in the second half of the year.
"For the near future we see a buyers’ market for routers,” says Paul Strauss, research manager for enterprise networks research at IDC.
Major LAN equipment trends in the second quarter include:
- Worldwide LAN Switch revenues exceeded $3.4 billion increasing by 1.4 percent quarter to quarter but were down by more than 25 percent from a year earlier
- Worldwide router revenues reached nearly $2.9 billion with a decline of 4.6 percent quarter to quarter and also were down more than 25 percent from a year earlier
- High-end router revenues now account for more than 46% of the total market. This sector showed a slight decline quarter to quarter, but was down by more than 37% from a year earlier. The main cause is tumbling enterprise sales, which now account for only 27% of high-end sales
- Gigabit Ethernet LAN switch revenues increased by more than 12.5% quarter to quarter, but the third quarter had declined sharply from the second. As a result, fourth quarter GigE sales were up only 13.5% from the same quarter a year earlier, considerably less growth than vendors had expected. GigE ports were up by less than 12.5% from the fourth quarter of 2000
- Cisco Systems increased its share of gigabit routers revenues by 0.6 percentage points to 65.9%, with its main rival, Juniper Networks, dropping sharply from 20.2% to 16.3%. Two newer players in the market, Riverstone Networks added 3.4 percentage points to 6.2% and Unisphere Networks 3.4 percentage points to 5.7%, grew rapidly.
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