Cisco adds to share of Ethernet switch market in Q2
Thursday August 15, 6:31 pm Eastern Time
Reuters Company News
SAN FRANCISCO, Aug 15 (Reuters) - Cisco Systems Inc.(NasdaqNM:CSCO - News), the No. 1 maker of network equipment, increased its share of the Ethernet switch market in the second quarter as business spending on gear for managing online traffic rose, according to a report released on Thursday. ADVERTISEMENT
Smaller competitor Foundry Networks Inc. (FDRY) also posted Ethernet switch market share gains in the second quarter from the first quarter, while Nortel Networks Corp. (NYSE:NT - News) lost market share, according to the report by the Dell'Oro Group, a telecommunications market research firm.
[Harry: That explains the relative strength of FDRY the last few weeks.]
Cisco's share of the overall Layer 2-7 switch market rose to 68.6 percent in the second quarter from 66.9 percent in the first quarter, while its share of the closely watched Layer 3 switch market rose to 48.8 percent from 46.9 percent.
Layer 3 Ethernet switches manage data flowing between sources and destinations over one or more networks. The switches, which create speedy shortcuts for data flows, also maintain service quality.
The overall Ethernet switching market grew 3.3 percent to $2.75 billion in the second quarter from the first quarter, suggesting that battered network gear makers may get a much needed boost from "enterprise" customers, mainly large businesses, analysts said.
"Our view is that the U.S. enterprise business is starting to stabilize," said Raj Srikanth, a network equipment analyst with Deutsche Bank Securities.
Sharply reduced spending by telecom carriers and service providers has hammered once high-flying network gear makers. Businesses also cut spending on network gear amid the slow economy, but recently have shown signs they will boost spending to upgrade networks as the economy recovers.
Merrill Lynch analyst Sam Wilson said there is an "upward bias" in business spending plans for network equipment, and such spending will pick up "ever so slightly" in the current third quarter as businesses respond to an economy growing in "fits and starts."
The Layer 3 switch market will reach $5.3 billion by 2004 from $3.9 billion this year as businesses -- and government agencies -- launch online applications and focus on network reliability, data recovery and voice-over-Internet Protocol technology, according to network industry analysts. |
