IP router/switch sales may reach all-time high in 2007

The need for IP routers and switches to power telecom service providers' next-generation networks are leading to an all-time-high sales year for equipment vendors, as consumer broadband and mobile voice and data needs also increase.

The growth of consumer broadband, mobile traffic, and telecom service provider moves to next-generation networks are giving IP router and switch vendors a strong end to 2007 sales, possibly an all-time high, according to new analysis by Infonetics Research.

In its most recent report, Service Provider Routers and Switches: IP, Ethernet and ATM, Infonetics Principal Analyst Michael Howard notes that the worldwide carrier switch and router market posted a solid gain in the third quarter of 2007, hitting $3.1 billion in a 12% sequential jump for the quarter.

Infonetics estimates that the IP router and switch market will continue growing through 2010 with more than $12 billion in revenue projected compared to more than $10 billion projected for 2007.

Gains in service provider router and switch sales this quarter were due to existing trends, rather than any new events, products or contracts.
Michael Howard
Principal AnalystInfonetics Research

"Gains in service provider router and switch sales this quarter were due to existing trends, rather than any new events, products or contracts," Howard said. The top two drivers continue to be:

  1. The ongoing migration of service providers to next generation networks based on an IP, MPLS and Ethernet data services layer;
  2. Growth in consumer broadband, corporate, mobile telephony and mobile data traffic.

"With the workforce becoming increasingly mobile, and IP video and peer-to-peer applications becoming increasingly popular (music and video downloading, YouTube clips, online news, social networks like MySpace), service providers must continue investing in routers and switches with higher speed ports to manage the fast growing voice and data traffic," Howard said in the report.

The third-quarter market was led by healthy IP router sales, remarkable sequential revenue growth (16%) from Juniper, and strong router performance by Cisco. Alcatel-Lucent also posted solid revenue numbers, the report shows, albeit slightly lower than the gains they posted the previous quarter, according to Infonetics.

Other highlights from the report:

  • 2007 is expected to set an all-time high record for worldwide service provider router sales
  • Worldwide Carrier Ethernet switch sales are forecast to grow 105% between 2006 and 2010; Cisco continues to lead by far in this segment, followed by Nokia Siemens
  • Worldwide service provider IP router unit shipments are up 15% and revenue is up 16% in 3Q07 from 2Q07
  • The portion of router and switch ports that are 10G Ethernet is increasing
  • Multiservice ATM switch revenue dropped 2% in 3Q07; main applications are still mobile backhaul/aggregation networks and DSL backhaul networks

The Infonetics report provides market share, market size, and forecasts for IP core and edge routers, multiservice ATM switches, enterprise-class Ethernet switches, and Carrier Ethernet switches and routers. The report also tracks IP edge routers and CES by application (multiservice edge, BRAS, Ethernet access transport, and Ethernet services edge).

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