Enteprise Router Revenue Down, Switches Boomed in ’04

According to a study by Infonetics Research, worldwide enterprise router revenue was down 2 percent for both the final quarter and entire year of 2004. In a similar study of LAN switches, the firm reported that market boomed, with yearly increases of 24 percent between 2003 and 2004.

In the router market, unit shipments were up four percent quarter-over-quarter and eight percent year-over-year despite the decrease in revenue. Infonetics says the dip the $3.4 billion market will begin to correct in 2006, when the firm predicts sales will return to where they were in 2003 ( $3.5 billion) and increase to $3.6 billion by 2008.

Twelve percent of the sales in the fourth quarter of last year “came from the sale of secure routers, up a percent from 3Q04,” said Infonetics Research’s Matthias Machowinski, directing analyst for enterprise voice and data. He noted that his firm predicts the market for secure routers will continue to grow, “accounting for 29% of total router revenue by 2008.”

Secure routers may also fade as a discrete market category.

“Over time, router vendors could add security features into their routers as a default offering, at no extra charge, causing the standard enterprise router category to disappear,” noted Machowinski.

Infonetics said market leader Cisco managed to grow over 2004, as well. It held on to 84 percent of the revenue and 77 percent of unit market share. Vanguard came in second place for revenue share with 1 percent, and Allied Telesyn came in second in units with 5 percent.

In the LAN switch market, things looked more robust. Infonetics reported worldwide LAN switch revenue totaled $3.8 billion in 4Q04, up 22% from 4Q03 and up 24% between 2003 and 2004.

“Its been a good year in the LAN switch market,” said Machowinski. “Sales of Gigabit switches drove the market significantly higher, and, on a yearly revenue basis, are finally outpacing those of 10/100M switches. Cisco continues to have a stronghold on the overall market, especially in the chassis segment. But Cisco has been steadily losing fixed configuration port market share over the last year, against competitors like NETGEAR and D-Link.”