In-Stat In-Sights. Worldwide Router Market Robust [ASND reference at bottom]
(via NT thread)
From the September 7, 1998 Issue of Electronic News
By Jeremy Duke,
Director, Networking Group, Cahners In-Stat Group
For the last two years, the total router market has been experiencing somewhat flat revenues quarter to quarter, teetering at about $1.5 billion each quarter. However, the total worldwide router market in 2Q98 grew a strong 10 percent over 1Q98, growing to the largest quarter ever for the router market measuring $1.7 billion.
The strong initial market acceptance of Layer 3 Switch Routers is a significant component to this large growth in 2Q98. If we were to strip out this new router category in the 2Q98 router market, the growth rate would be much more modest at 4 percent. Nevertheless, 4 percent growth without this is impressive for a communications technology that is moving into its 2nd decade. Growth opportunities for the traditional router segments include new applications such as voice-over IP and virtual private networks providing newfound growth for branch office routers and mid-range routers.
Continued advances in high end routing, addressing the phenomenal growth of the Internet and providing advanced service features (i.e. QOS) for private and service provider continues to spur high ticket purchases on high end routers.
Enterprise LY3 Switch Routers were off to a strong start for the first six months of 1998. Total sales for the 1H98 were $317 million. And given that not all Enterprise LY3 Switch Routers were brought to market in 1H98, we expect the year to be an outstanding one. Cahners In-Stat Group anticipates the Enterprise LY3 Switch Router market to grow to representing 12.5 percent of the total router market. In 2Q98, Bay Networks maintained the number one spot with a 43.1 percent market share for Enterprise LY3 Switch Router sales.
Cahners In-Stat Group does not anticipate the Carrier Class SONET Router market to add significant growth in 1998, given that many of these routers will not be shipping until the later half of the year. It is Cahners In-Stat Group's expectation that this router category will represent less than 10 percent of the high-end router market in 1998.
We further anticipate stronger growth in 1999 as:
* large private networks and service provider networks migrate from circuit-switched networks to packet-based networks;
* and the Internet continues its phenomenal growth
Across the traditional router segments, Cisco maintains the number one position with a 55 percent share of Worldwide Routers Shipped, and a 66 percent share of Worldwide Router Revenue.
In a distant second and third place, Bay Networks and 3Com have market shares of 15.3 percent and 4.5 percent, respectively. Bay Networks grew its market share in revenue by four market share points, primarily at the expense of Cisco. This was driven by the success of Bay's Layer 3 Switch Router. Bay has strong prospects to continue its
market share gains if it can continue the sales momentum of the Layer 3 Switch Router as well as deliver on a next generation carrier class high end router. With Bay's extensive routing history and the deep pockets and worldwide reach of Nortel, Bay like no other internetworking company, could pose a threat to Cisco's iron clad grasp of the high end router market.
The largest component of unit shipments in the router market continues to be the low-end router segment that is comprised of branch office and SOHO routers. In 1997, 90.9 percent of all router shipments were low-end routers. In 1Q98, the market share rankings for low-end router sales included Cisco, Bay, 3Com, IBM, and Ascend with respective market shares of 62 percent, 11.5 percent, 5.1 percent, and 5.0 percent. |
