November 20, 1998
SAN JOSE, CALIFORNIA, U.S.A. : Research published this morning by Dataquest, a division ofthe
Gartner Group [NYSE:IT], suggests that, despite the falling cost of hardware, revenues from local
area network (LAN) switches are going through the roof.
In research that could make PC vendors' jealous, Gartner says that, during the third quarter of this
year, revenues topped the $2.1 billion mark. The report notes, however, that, while the routers and
LAN switch markets are doing very nicely, the shared media hubs marketplace is struggling.
Delving into the research, which is published as part of Dataquest's Networking Worldwide
program, the $2.1 billion revenues for the third quarter were some 28.7 percent higher than for the
same period last year.
Breaking down the figures reveals that Fast Ethernet switches accounted for the lion's share, $1.2
billion, of the $2.1 billion market.
According to John Armstrong, a principal analyst for Dataquest, this area of the market, also
known as the layer 3 switch market, is performing very strongly.
"Layer 3 switches have grown to account for $188 million of the LAN switch market. Layer 3
switches are poised to be one of the fastest growing segments in the coming quarters," he
explained.
According to Dataquest, during the third quarter, the worldwide router market grew 19.3 percent
with revenue reaching $1.6 billion, while shared media hubs revenue slipped to just $516 million in
the quarter -- down 44 percent on the same period last year.
Armstrong noted that demand for multigigabit routers is continuing to increase, with the result that
the networking industry should look out for changes in the multigigabit router space as new market
entrants begin to ship products later this year.
"Shared media hub port shipments have declined as the lure of higher- performance switching
solutions becomes stronger," he explained.
Further details of Dataquest's research in the networking marketplace is available on the firm's Web
site at dataquest.com .
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