IDC Predicts Gradual Recovery For Global Router And Switch Markets In 2002

FRAMINGHAM, MA – FEBRUARY 19, 2002 – IDC today released its fourth quarter worldwide figures of the router and LAN switch markets, showing significant quarterly declines in router revenues and a flat market for LAN switches. According to the market intelligence and advisory firm, worldwide router revenues declined by 4.6% quarter to quarter. LAN switches were up by a nominal 1.4%.

 

Both router and LAN switch markets were down by more than 25% 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 now 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. "With market growth constrained, vendors are fighting for share and in many cases cutting prices. In contrast, LAN switch prices are declining at a normal rate." IDC’s worldwide quarterly research shows that per-unit prices declined most in high-end routers, where service provider router prices declined 18% quarter to quarter.

Major LAN equipment trends in the second quarter shown by IDC’s Network QView service:

Worldwide LAN Switch revenues exceeded $3.4 billion increasing by 1.4% quarter to quarter but were down by more than 25% from a year earlier;

Worldwide router revenues reached nearly $2.9 billion with a decline of 4.6% quarter to quarter and also were down more than 25% 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.

For more information on IDC's WW Network QView service, contact Jonathan Guloyan at 508-935-4296. To purchase the electronic copy of IDC’s 2Q00 WW Network QView results, please contact Demetra Georgakopoulos at 1-800-343-4952 extension 4496 or by email at demetra@idc.com.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world’s leading IT suppliers, IT organizations, ebusiness companies and the financial community. Additional information can be found at www.idc.com.

IDC is a division of IDG, the world's leading IT media, research and exposition company.

 

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