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Network Hardware Sales Moving On Internet - Study
Newsbyte News Network - Tue, Oct 28 1997
SAN JOSE, CALIFORNIA, U.S.A., 1997 OCT 28 (NB) -- By
Craig Menefee. The Internet's explosive growth is having broad
effects on where network hardware vendors are finding their
market, according to a new study released by market research firm
Dataquest. The study's author calls the Internet the fastest-growing
customer segment for data networking equipment.
Not surprisingly, say Dataquest, Cisco Systems Inc. and Ascend
Communications, Inc. hold the lion's share of Internet-specific
equipment sales -- for now.
According to Dataquest, network equipment sales into the Internet,
as opposed to internal corporate network markets, surpassed $2
billion in 1996 for the first time. This total represents a bit over 11
percent of the total $18 billion network equipment market.
John Coons, director and principal analyst for Dataquest's Internet
Infrastructure program, told Newsbytes he could not predict where
the market is going with any accuracy because it is the first time
Dataquest has looked specifically at this market segment.
"We're going to do this again at the beginning of 1998," he added.
"So in April we'll have two points, which is much better than one.
Plus, in the next few months we'll go talk to the ISPs and find out
what they expect to do. So in April we'll do a full five-year
forecast."
Asked for his gut feeling on where the market is headed, he replied:
"These equipment markets are growing fast -- maybe between 50
and 100 percent aggregated growth rate. The question I have is
about this 11 percent -- is that going to hold or will it increase? My
gut feel is that it will increase.
"So you're going to have a total market that in 1996 was at $18
billion. In 1997 we could be looking at $30 to $40 billion. Eleven
percent of that would be respectable, and if this goes up to 15 or 15
percent -- the Internet will be taking a larger and larger share of the
equipment market."
Coons said he thinks that may account for the entry into Internet
markets of equipment vendors like 3Com and Bay Networks.
"I think they're all playing a game of catch-up," Coons claimed.
"The Internet is growing faster than any network ever has. These
equipment vendors not only have to keep up with volume, they have
to keep up with scale. The devices they ship into the Internet have
to keep handling more and more traffic, more and more sessions,
more and more simultaneous users. It's a tremendous challenge. It's
not like selling 10,000 seats to Ford or DuPont -- the next year you
don't have to sell 100,000 seats to them. But that's the scale of
Internet growth."
The 1996 data were gathered as part of Dataquest's "Internet
Infrastructure Network Equipment Market Statistics" perspective
report on market size and vendor market share estimates worldwide.
The report focuses on network equipment shipments to Internet
service providers (ISPs) and backbone operators.
According to the report, routers and access equipment drive the
market for Internet infrastructure hardware. Cisco and Ascend hold
strong market positions in those areas, accounting for their dominant
position in the 1996 report's findings. Routers accounted for 59
percent of the total market, while access equipment came to 25
percent of total 1996 Internet infrastructure sales revenues.
Coons says the Cisco/Ascend dominance is no longer going without
challenge.
"There are a dozen or more start-ups about to enter the market with
an array of new multigigabit routing platforms," said Coons, who
noted the new products will share the stage with Cisco GSR and
Ascend GRF "go fast" routers.
Asked for examples, he cited Juniper, Avici, Berkeley Networks,
Pluris, GigaPacket, Ennovate, NeoNet, Netcore, and Torrent.
"Some of this technology is so new, these companies don't even
want you talking about them," Coons added.
The new super-fast devices will provide IP (Internet Protocol)
communications over asynchronous transfer mode (ATM) or
synchronous optical network (SONET) connections at OC-12 and
even OC-48 speeds. The new technology, stated Coons, will range
"from hyperspeed address lookup mechanisms to processors fully
capable of enforcing complex policies at these breakneck speeds."
The Dataquest World Wide Web site at dataquest.com
has further information on the Internet network hardware and other
recent reports.
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