Cisco defies economy, and rivals
Tuesday, June 26, 2001
technology.scmp.com
BIEN PEREZ
Despite the bearish economic outlook, Cisco Systems remains well ahead of its competition in the Asia-Pacific market, excluding Japan, for LAN (local area network) gear.
According to research firm International Data Corp (IDC), Cisco took more than 50 per cent of the region's overall LAN market in the first quarter of this year, keeping at bay rivals such as Alcatel, Juniper Networks and 3Com.
China was the region's largest market for LAN equipment during the period. It was followed by South Korea, Australia, India and Singapore.
3Com and Linksys remained behind Cisco in the overall Asia-Pacific LAN market, excluding Japan.
Lau Tong Yen, senior analyst for communications research at IDC Asia-Pacific, said Cisco put in a strong performance despite economic slowdown, traditional holidays, sluggish expenditure by telecommunications companies and the restructuring undertaken by the company and the other major networking gear vendors.
Cisco, the world's top supplier of networking equipment, was hurt the most late last year and early this year when many enterprises and telecoms companies cut spending, as well as when many of the new United States-based carriers for which it helped finance equipment purchases suddenly closed down.
As a result, Cisco wrote off excess inventory and streamlined staff and operations at a cost of more than US$2 billion.
IDC said Cisco took market share from Asia-Pacific rivals in the first quarter, when the LAN sector was worth US$950 million.
LAN gear includes hubs, network interface cards (NICs), routers and switches. The first quarter, however, saw a decline of 20 per cent in revenue to a quarterly growth rate of 7 per cent from more than 20 per cent in the previous three quarters, IDC said.
"Even though the Asia-Pacific LAN industry, excluding Japan, showed negative sequential growth in the first quarter of 2001, IDC believes there will be revived opportunities during the next six to 12 months in selected markets due to the strong demand in the telecom-carrier and government-education sectors," Ms Lau said.
China and India are expected to be the big markets for LAN sales for the next six to 12 months. During the first quarter of this year, the two countries posted annual growth rates of more than 75 per cent for LAN gear sales.
Switches contributed to half of the total LAN revenue in the first quarter, absorbing lower demand for hubs and NICs. Demand for Layer 3 category switches was significant in New Zealand and Hong Kong. The top three vendors in this segment were Cisco, Enterasys and Alcatel.
"The need for high-availability networks will be one of the biggest factors driving growth of LAN switches," said Katrina Dahlquist, senior analyst at IDC's enterprise networks research programme. "Network managers interested in running efficient, multi-service networks that prioritise traffic, optimise bandwidth and guarantee application performance will begin to use more sophisticated features of LAN switching equipment."
Sales of high-end routers - costing more than US$20,000 each and including the gigabit-level and terabit-level routers - grew substantially in Australia, Hong Kong and Taiwan.
In this segment, IDC said Cisco took market share from Juniper, which had taken customers from Cisco six to 12 months before. |
