Ethernet switch grows, enterprise routers disappoint

BOSTON, USA: Ethernet switch revenue inched up one percent in 4Q10 from 3Q10, enough to set a new quarterly sales record of $4.79 billion, finds market research firm Infonetics Research in its latest report.

On the other hand, although global enterprise router revenue rose seven percent to $920 million in 4Q10 over 3Q10, unit sales were down both sequentially and from a year ago, reflecting the slow pace at which businesses are expanding despite the fact that the economy is returning to health.

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Whereas, the global WLAN equipment market grew 10 percent in 4Q10 over 3Q10, to $769 million, continuing a trend of positive growth.

Matthias Machowinski, directing analyst for enterprise networks and video at Infonetics Research, said: "Wired and wireless Ethernet switching sales took a hit during the recession, but now they're back stronger than ever. The spring-back is partially due to pent-up demand and the need to upgrade networks to eliminate congestion."

Ethernet switch sales also set a new annual high of $18.8 billion in 2010, nearly $1 billion higher than the pre-recession high in 2008. In the next few quarters, 1G ports will begin out-shipping Fast Ethernet for the first time, an important inflection point.

WLAN revenue is up 28 percent from the year-ago quarter (4Q09). For the year, WLAN sales are up 23 percent to $2.7 billion, driven by the fundamental trend towards enterprise mobility and wired LAN and WLAN convergence.

Whereas, for the same year, the enterprise router market grew 11 percent to $3.4 billion in 2010, disappointing considering the market stood at $4.3 billion pre-recession in 2008, and in sharp contrast to the record-breaking sales of Ethernet switches and wireless LAN equipment.

"However, another factor at play is the realization by many enterprises that building out their network coverage, including mobile access, improves communication among employees and access to IT applications, and that has a profound effect on productivity and competitiveness," notes .

Juniper was the shining star in 4Q10, with a 21 percent sequential jump in Ethernet switch revenue, driven by strong data center sales. Juniper tripled its Ethernet switch sales in 2010, moving into a solid #3 position.

Cisco, the market leader by far, lost market share during the recession, however, managed to gain it all back, with revenue share up a full point in 2010 (70.4%) over pre-recession 2008

The report finds that for the first time, 802.11n APs (access points) outnumbered legacy a/b/g APs in 4Q10, a shift that is helping support ASPs across most categories.

In 4Q10, Cisco maintains its lead in worldwide WLAN equipment revenue (excluding WiFi phones), followed by Aruba.

HP finished strong in 4Q10, with enterprise router sales up more than 50 percent from 3Q10, whereas, Cisco's 2010 enterprise router revenue is off 18 percent from 2008, however still, Cisco managed to pick up market share (up 1.7 points to 78.2 percent in 2010) as other vendors declined.