Ethernet Switch Market on the Rise

A wave of upgrades and the anticipation of future broadband requirements is
responsible for the increasing health of the Ethernet switch market.

Redwood City, Calif.-based Dell’Oro Group reported that Ethernet switch sales gained
24 percent during the third quarter this year over the previous year for a total of $3.5 billion in sales. It is a 9 percent increase over the second quarter of this year.

Scottsdale, Ariz.-based Synergy Research Group reported that the market had grown by 23
percent year over year and 9 percent sequentially. According to its statistics, the Ethernet
switch market has benefited from a wave of upgrades since the first quarter of this year.

“Switches installed in the late 1990s are being replaced with versions supporting new
capabilities,” said Joshua Johnson, industry analyst at Synergy Research Group, in a statement.
“Customers are buying switches that have Quality of Service (QoS) and virus containment abilities.
They are frequently deploying end-to-end Gigabit Ethernet links to prepare the network to have
bandwidth headroom while carrying voice traffic now and video traffic over time.”

Dell’Oro reports Cisco as being the No. 1 vendor in terms of market share revenue in the
total Ethernet switch market with a third-quarter growth this year of 12 percent. Nortel holds on to the
No. 2 spot despite losing 5 percent of its market share. HP and 3COM round out the top five, though
both lost market share, with HP dropping 1 percent and 3COM dropping 11 percent.

Synergy’s data points to a slightly different picture, as it tracked the unmanaged Ethernet Switch
Market Share. The firm placed D-Link in the No. 1 position, though it lost 3 percent
market share this quarter. Allied Telesyn, which gained 20 percent, came in second. Linksys
(a Cisco company) came in at No. 3, though it reported the largest percentage growth this
quarter at 38 percent. Rounding out Synergy’s top five was 3Com (-4 percent) and Netgear (+ 9 percent).

10 Gigabit Ethernet switches are also growing particularly strong, with Synergy Research reporting
84 percent year over year growth. Dell’Oro also sees 10 Gigabit as growing as priced drop.

“We are seeing a two-pronged upgrade taking place,” said Seamus Crehan, Director of Ethernet
Switch Research at Dell’Oro Group, in a statement. “Sales of Gigabit and 10 Gigabit Ethernet switch
ports are increasing as prices are dropping and users are future-proofing for additional bandwidth
requirements. In addition, the market for the more feature-rich 100 Mbps fixed configuration switches
continues to expand, as users upgrade networks to handle newer applications, such as IP telephony,
security and wireless LAN.”

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