The Asia/Pacific LAN Market — Seeing Red For The First Time In Q298, Reports IDC

FRAMINGHAM, Mass., Sept. 28, 1998 — According to a recent report from market research firm International Data Corporation, Asia's local area networks (LAN)markets have finally felt the impact from the region's economic troubles.

"Asia's LAN markets have been relatively safe from the currency crisis," said Sandra Ng, Manager of IDC Asia/Pacific's Networking Products Research, "but it seems the impact has finally hit in the second quarter." The IDC report found an overall 12.6 percent decline in revenue for LAN markets in Asia (excluding Japan) in the second quarter of 1998 when compared to the same quarter last year. Compared to the first quarter of the year, the second quarter saw a decline of 10.1 percent in revenue terms.

China Shows Strength

With the exception of China, Australia and India, all other markets showed negative quarter-on-quarter growth rates. China remained the largest LAN market in the Asia/Pacific region (excluding Japan) with close to 30 percent share of the region's LAN markets. "This is equivalent to a quarter-on-quarter growth of close to 50 percent in revenue terms. China's IT and telecom infrastructure continues to provide LAN vendors with growth opportunities," said Ng. Australia and India LAN markets also managed to stave off significant declines as these markets continued to receive attention from LAN vendors because of the economic stability of these countries.

For the first time, Taiwan overtook Korea to become the third largest LAN market in the region. This was due to a drastic decline of more than 20 percent in the past two quarters for the Korean LAN market and growing LAN connectivity among small and medium-sized organizations in Taiwan.

LAN Switches are a Bright Spot

In terms of product categories, all product segments including hub, NIC, router and LAN switch showed negative growth rates on a sequential basis. However, LAN switch managed to register a positive quarter-on-quarter growth rate of 9.5 percent in revenue terms due to declining price points and increasing sophisticated demand of users.

Product share of fixed port unmanaged hubs — in percentage terms — grew in the past two quarters due to increasing budget constraints as a result of the economic crisis. Similarly, fixed port switches have grown in popularity given the availability of fewer large projects in the region. In the NIC segment, demand for PC cards grew strongly given the increasing popularity of portable PCs and increasing LAN and remote connectivity requirements. In the router category, base low tier 3 — US$3,001 to US$8,000 — remained the most popular models in the region.

ATM and Gigabit Ethernet Hang Tough

In terms of transmission technology, all segments except ATM and Gigabit Ethernet (GbE) showed negative sequential growth rates. The continuing demand for ATM was due to the implementation of critical infrastructure-related projects in the region. As for GbE, strong vendor promotion and a small base resulted in the high positive growth in percentage terms. Fast Ethernet continued to grow rapidly in technology share terms, mainly at the expense of its Ethernet counterpart. Technology share of Token Ring also grew due mainly to IBM's success in some markets and Olicom's aggressive push since its entry in 1997.

Top vendors in the region in Q298 in revenue terms were Cisco, 3Com, IBM, Bay Networks, Cabletron/Digital and Intel.

The findings stem from IDC's Asia/Pacific Local Area Networks research. For more information on this product or to purchase any of IDC's Asia/Pacific offerings, please contact Lisa Cosmas at 650-962-6407, by e-mail at lcosmas@idc.com or Lisa Bloom at 508-935-4236, by e-mail at lbloom@idc.com.

IDC Asia/Pacific is a subsidiary of U.S. market research firm International Data Corporation. Data includes aggregate shipments from IDC offices in Australia, New Zealand, Korea, China, Taiwan, Hong Kong, Singapore, Malaysia, Indonesia,

Philippines, Thailand, India and the 'Rest of Asia/Pacific' (ROAP).

About IDC

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