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Enterprise Router Revenue Takes A Nosedive

Lower prices drive revenue down 20% compared to the first quarter of 2004, despite an increase in shipments.

Continuing price pressure has forced enterprise router revenues down, despite strong market demand and growing sales, according to Infonetics Research's newly-released "Enterprise Routers quarterly worldwide market share and forecast report."

The report notes that enterprise router revenues were down 9% in the first quarter of this year, and down 20% over the first quarter of 2004, totaling $750 million. Nevertheless, market demand continues to grow steadily. Shipments were up 4% last quarter, and Infonetics expects the trend to continue for the foreseeable future, estimating that unit shipments will reach 1.9 million in 2008.

The growth is being largely driven by demand for secure enterprise routers, which make up 13% of market revenues, up slightly from the previous quarter. Secure router shipments rose by a dramatic 19% in the first quarter to 53,000 units, while revenues experiences a corresponding 3% drop to $96.4 million.

"Overall demand for routers was solid in the first quarter, as evidenced by the 4% sequential increase in unit shipments, but vendors saw significant pricing pressure, and revenue per unit dropped almost across the board," Infonetics directing analyst, enterprise voice and data Matthias Machowinski said in a statement. "The 11% revenue-per-unit decrease at Cisco had the most profound effect on the market."

Cisco has, in fact, maintained its dominance, and controls a majority of both market share and revenues. Vanguard is a distant second in revenues, and Allied Telesyn is second in unit shipments.

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