Sales of Ethernet switches and routers around the world continue to show strength, says an industry analyst, but make no assumptions about a trend.
“Things are good relative to last year’s dismal performance,” Rohit Mehra, director of enterprise communications infrastructure research at IDC, said in an interview on the release of second quarter revenue figures for the two markets.
In fact, he said, at the end of the year revenues may beat IDC’s projection of US$17.2 billion in revenues. Revenues for the first half of the year are already US$10.7 billion. If the first half numbers keep the pace the rest of the year, “we will blow those numbers away,” Mehra said.
Last year router and switch revenue was only US$15.7 billion. In fact, in 2008 switch revenues alone were about US$20 billion, which shows how bad 2009 was.
However, he put the numbers in perspective by cautioning that the Q2 revenues are virtually the same, not accelerating, compared to the first quarter, indicating sales are steady.
Revenues of Ethernet switching devices were up 32.7 per cent in Q2 over the same period in 2009, while router revenues increased 11 per cent over the second quarter of last year.
But the numbers look different when comparing the first and second quarters of this year. The router market showed “moderate strength” in the April-June period over the first quarter, said IDC, while the enterprise router market was “marginally lower.” That segment of the router market “continues to be soft,” said IDC, down 25 per cent compared to the record levels of 2007.
Within the switch market, revenue leapt almost 90 per cent for 10 GbE devices in the second quarter. For the first time, IDC said, more than 1 million 10 GbE ports shipped from manufacturers.
“The continued adoption of Power over Ethernet (PoE) and gigabit Ethernet is also being helped by the underlying network drivers – the growth of voice and video over IP applications, network-attached devices, virtualization and cloud computing,” Mehra said.
Cisco Systems Inc. lost some market share in Q2, dropping to 65.8 per cent of the market from 68.3 per cent in what IDC called an “exceptionally strong” quarter.
How far these figures can project into the rest of the year is a question. Earlier this month Cisco reported lower than expected revenues for its fourth quarter, which ended July 31, although the numbers were good. The equipment maker pulled in US$1.9 billion in the quarter, compared to US$1.1 billion for the same period in 2009. But CEO John Chambers told reporters he’s seeing signs that the economic recovery is slowing.
“We certainly have seen strength in Q1 and Q2, there’s no doubt about that,” said IDC's Mehra. “Baring something major, we’re on track to go back to the levels of 2008.”