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This report reviews the revenue growth, market share, price and volume
trends of key Data Networking markets during the first three quarters of 1997
and last quarter of 1996. Market data for the September 1997 quarter are
compared with earlier quarters to give a perspective on the industry leaders as
well as the direction of each market.
Key Findings: Revenue Growth and Market Share
. In the LAN Switch market, revenues increased by 21% sequentially to $1.4 billion,
and by 56% compared to the year-ago quarter. Cisco continues to lead this
segment with 38% market share, up three percentage points from the previous
quarter.
. The ATM LAN Switch market increased by 16% sequentially to $146 million, and
by 44% compared to the year-ago quarter. Cisco leads this segment with 24%
market share, up five percentage points sequentially. Bay has 19% market share
and gained four percentage points sequentially.
. The ATM WAN Switch market increased by 5% sequentially to $284 million, and
increased by 67% compared to the year-ago quarter. Newbridge leads this
segment with 29% market share, up three percentage points over the previous
quarter. Cisco is its closest competitor with 27% market share.
. In the Remote Access Server market, sequential revenue growth was flat
sequentially at $569 million, but increased by 9% compared to the year-ago
quarter. 3Com leads the market with 39% market share, up seven percentage
points sequentially. Ascend1s market share declined sequentially from 31% to
24%.
Key Findings: Price and Volume Trends
. In the LAN Switch market, Fast Ethernet port shipments (26% of total port
shipments) increased sequentially by 86% to 1.5 million ports during the third
quarter, compared to a sequential increase of 76% during second quarter.
Average Selling Price (ASP) declined sequentially by 17% in the third quarter and
by 24% in the second quarter. Cisco leads the Fast Ethernet segment with 52%
market share.
. In the Remote Access market, Access Concentrator port shipments (75% of total
port shipments) increased sequentially by 45% to 2.1 million ports, compared to a
sequential increase of 51% during the second quarter. ASP1s declined sequentially
by 32% and 30% in the third and second quarters, respectively. 3Com leads the
Remote Access Concentrator market with 43% market share.
Comment
United States
Telecommunications Equipment/Networking
4 December 1997
Joseph J. Bellace
First Vice President Data Networking
Analysis of Revenue Growth, Market Share and Price/Volume
Trends < September 1997 Quarter
Reason for Report: Industry Trends
Data Networking - 4 December 1997
2
Market Summary by Segment
Table 1: Data Networking Quarterly Revenue*
(In millions of $)
Sequential Quarterly Trends
(Sep 97 / Jun 97)
4Q 1996 1Q 1997 2Q 1997 3Q 1997
Unit/Port
% Change
ASP**
% Change
Revenue
% Change
LAN Switch $ 1,077 $ 1,097 $ 1,125 $ 1,360 34 % (13) % 21 %
ATM LAN Switch 124 124 126 146 19 (6) 16
ATM WAN Switch 215 246 270 284 7 (1) 5
Routers 1,226 1,208 1,249 1,314 13 (3) 5
Remote Access 520 553 570 569 37 (19) 0
Shared Media Hubs 964 877 884 840 11 (11) (5)
Network Interface Cards (NIC) 1,109 990 1,010 907 3 (13) (10)
Source: Dell1Oro Group, In-Stat
*Revenue is reported in Manufacturer Sales, except for the NIC segment which is reported in End-User Sales
**Unweighted average of percent change in ASP across major subsegments
Data Networking - 4 December 1997
3
Market Summary by Company
n 3Com Corporation
3COM continues to lead the Network Interface Card (NIC)
and Remote Access segments, holding 36% and 39%
market share positions in each segment, respectively. In
the Remote Access segment, the company gained seven
market share points sequentially, and in the NIC segment,
the company gained five market share points sequentially.
The company is a leading player in the Shared Media Hub
market and increased its market share from 20% last
quarter to 22% this quarter. 3COM trails BAY who holds
a 23% market share in this segment.
3COM increased its revenues in the LAN Switch segment
by 6% sequentially and has 14% market share, down from
16% in the previous quarter.
Table 2: 3Com Revenues*
(In millions of $)
4Q
1996
1Q
1997
2Q
1997
3Q
1997
% Change
(3Q/2Q)
LAN Switch $ 182 $ 175 $ 185 $ 195 6 %
ATM LAN Switch 11 14 17 14 (16)
Routers 61 44 56 52 (8)
Remote Access 158 193 182 221 21
Shared Media Hubs 177 165 175 183 5
Network Interface Cards(NIC) 360 375 333 331 0
Source: Dell1Oro Group, In-Stat
*Revenue is reported in Manufacturer Sales, except for the NIC segment which is
reported in End-User Sales
n Ascend Communications
ASCEND1s market share in the Remote Access segment
dropped to 24% from 31% in the previous quarter.
ASCEND trails 3COM who holds a 39% market share in
this segment.
Table 3: Ascend Revenues*
(In millions of $)
4Q
1996
1Q
1997
2Q
1997
3Q
1997
% Change
(3Q/2Q)
ATM WAN Switch $ 19 $ 14 $ 14 $ 15 6 %
Routers 18 18 23 26 9
Remote Access 150 172 174 136 (22)
Source: Dell1Oro Group, In-Stat
*Revenue is reported in Manufacturer Sales
n Bay Networks
BAY narrowly leads the Shared Media Hub market with a
23% market share, up from 21% during the previous
quarter. 3COM is its closest competitor in this market with
a 22% market share.
The company continued to increase its market share in the
ATM LAN Switch market moving to 19% this quarter, up
from 15%, 14% and 11% during the previous three
quarters. In this market, BAY trails CISCO and FORE
who have market shares of 24% and 23%, respectively.
BAY also gained market share in the rapidly growing LAN
Switch market, increasing to 11% market share this quarter
from 9% in the previous quarter.
Table 4: Bay Networks Revenues*
(In millions of $)
4Q
1996
1Q
1997
2Q
1997
3Q
1997
% Change
(3Q/2Q)
LAN Switch $ 74 $ 81 $ 107 $ 150 41 %
ATM LAN Switch 14 17 19 27 43
Routers 156 136 125 132 6
Remote Access 17 15 14 14 (4)
Shared Media Hubs 209 190 190 197 4
Source: Dell1Oro Group, In-Stat
*Revenue is reported in Manufacturer Sales
n Cabletron Systems
In the LAN Switch market CABLETRON has 13% market
share, and trails CISCO and 3COM in this market. In the
Shared Media Hubs segment, the company has 11% market
share, down from 13% in the previous quarter.
Table 5: Cabletron Revenues*
(In millions of $)
4Q
1996
1Q
1997
2Q
1997
3Q
1997
% Change
(3Q/2Q)
LAN Switch $ 184 $ 193 $ 160 $ 177 11 %
Shared Media Hubs 119 119 113 93 (18)
Source: Dell1Oro Group, In-Stat
*Revenue is reported in Manufacturer Sales
Data Networking - 4 December 1997
4
n Cisco Systems
CISCO continues to dominate the Router and LAN Switch
segments with market shares of 64% and 38% in each,
respectively. CISCO1s market share in the LAN Switch
market is up from 35% in the previous quarter. The
company1s closest competitors in these markets are BAY
with a 10% market share in the Router segment, and
3COM with a 14% market share in the LAN Switch
segment.
The company also leads the ATM LAN Switch segment
with a 24% market share, up from 19% in the previous
quarter.
In the ATM WAN Switch segment, CISCO has 27%
market share, and trails NEWBRIDGE who had 29%
market share during the September quarter.
CISCO increased its market share in the Remote Access
Server market to 18% this quarter, up from 16% during the
previous quarter. The company trails 3COM and
ASCEND who lead this segment with market shares of
39% and 24%, respectively
Table 6: Cisco Revenues*
(In millions of $)
4Q
1996
1Q
1997
2Q
1997
3Q
1997
% Change
(3Q/2Q)
LAN Switch $ 332 $ 363 $ 389 $ 514 32 %
ATM LAN Switch 24 25 24 36 48
ATM WAN Switch 42 70 75 78 4
Routers 753 787 788 838 6
Remote Access 87 73 93 100 8
Shared Media Hubs 29 52 51 46 (10)
Source: Dell1Oro Group, In-Stat
*Revenue is reported in Manufacturer Sales
n Fore Systems
FORE has 23% market share in the ATM LAN Switch
segment, up modestly from 22% in the previous quarter.
The company is a close second to CISCO who has 24%
market share in this segment.
In the ATM WAN Switch market the company holds 10%
market share, a modest improvement from 9% market
share in the previous quarter.
Table 7: Fore Revenues*
(In millions of $)
4Q
1996
1Q
1997
2Q
1997
3Q
1997
% Change
(3Q/2Q)
LAN Switch $ 33 $ 28 $ 26 $ 28 8 %
ATM LAN Switch 41 34 28 34 22
ATM WAN Switch 19 17 24 29 20
Source: Dell1Oro Group, In-Stat
*Revenue is reported in Manufacturer Sales
n Newbridge Networks
NEWBRIDGE leads the ATM WAN Switch segment,
increasing its market share to 29%, up from 26% in the
previous quarter. CISCO is the company1s closest
competitor with 27% market share.
Table 8: Newbridge Networks Revenues*
(In millions of $)
4Q
1996
1Q
1997
2Q
1997
3Q
1997
% Change
(3Q/2Q)
ATM WAN Switch $ 47 $ 58 $ 71 $ 81 15 %
Shared Media Hubs 22 18 15 15 4
Source: Dell1Oro Group, In-Stat
*Revenue is reported in Manufacturer Sales
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Opinion Key [X-a-b-c]: Investment Risk Rating(X): A - Low, B - Average, C - Above Average, D - High. Appreciation Potential Rating (a: Int. Term - 0-12 mo.; b: Long Term - >1 yr.): 1 - Buy, 2 - Accumulate, 3 - Neutral, 4 -Reduce,
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