IP router sales outdistance Ethernet cousins

Twice as much money is being made throughout the world from Internet Protocol (IP) router sales as from sales of Ethernet multiservice switches, according to market research firm RHK Inc.

That gap could begin to narrow over the next year or two, however, as carriers begin to deploy more lower-end Ethernet switches, said Mark Seery, program director for IP service infrastructure program at RHK Inc. in South San Francisco.

Right now, sales figures of IP routers are growing at a faster clip than their Ethernet competitors.

“Part of that is the competition that Ethernet faces from IP routers, so whereas you might expect that at the edge of an Ethernet service it would be an Ethernet switch, sometimes there’s an IP MPLS router,…which would take the revenue away from what you might think is going to an Ethernet switch,” Seery commented.

He added, however, that carriers might be making greater use of low-end Ethernet switches for aggregating Digital Subscriber Line (DSL) in the future.

“That hasn’t quite kicked in yet,” Seery said. “As the focus moves to lower-end Ethernet switches, I think you’ll see an increase in the number of units, but not a substantial increase in the amount of revenue.”

This will happen when carriers move to Ethernet-based DSL platforms, he added,

“And that’s just beginning to happen; we don’t expect the big migration to happen until the 2005-2006 timeframe.”

According to the RHK findings, the global edge IP router market grew 21 per cent in the third quarter of 2004. Edge multiservice switches grew 13 per cent. There was an overall growth of 10 per cent in the global switching and routing market.

According to Seery, sales of packet transport layer equipment was “depressed” in North America when compared to other regions. That could be attributable to various factors, he said. “Possibly because Voice over IP isn’t being deployed as fast as in other parts of the world, possibly because the (carrier bandwidth) overcapacity problem was bigger in North America than it was in other parts of the world.”

RHK also found that market share by vendor in the global switching and routing market remained relatively unchanged from the second quarter of this year. Cisco Systems Inc. leads with 47 per cent, followed by Juniper at 14 per cent, Nortel Networks at 12 per cent and Alcatel at eight per cent. Juniper was the quarter’s biggest gainer, moving up 1.4 per cent. Nortel’s decline was steepest, falling 1.2 per cent.

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