Infonetics' Matthias Machowinski, directing analyst for enterprise networking and video, expects sales to be down in Q4 but that they will continue to grow in 2011, "albeit at a much slower pace." He attributes the strong growth to the under-investments in 2009 "and a focus on lowest cost" taking a toll and driving sales to new heights. Customers are reinvesting in high-end switching, core networking and data center upgrades, he says.
Cisco was the big winner, with its Ethernet switch revenues up 2 percent quarterly but 36 percent year-over-year, according to Machowinski. It accounted for 92 percent of the sequential quarterly increase in enterprise router sales in the third quarter of 2010. The other top vendors were Hewlett-Packard, Juniper, D-Link and Brocade (switches), and Juniper, HP, OneAccess and Adtran (routers).
The other significant trend Machowinski notes is the move to higher-speed Ethernet. "10G [10 Gigabit Ethernet or 10GoE] adoption is moving along nicely, and is expected to more than double in 2010 to 4.6 million ports. 40G ports aren't shipping yet, though it could happen in Q4. Regardless, 40G will have limited impact on the market for the next couple of years."
The Dell'Oro Group said that 10GoE and data center switches drove the record Ethernet quarter (Ethernet Switch Quarterly Report). It puts the third quarter of 2010 revenues up 33 percent year-over-year, with Cisco, HP and Juniper adding the most in incremental revenue in L2-L3 switching, while F5 added the most incremental revenue in L4-7 Server Load Balancing. Dell'Oro also expects next year's Ethernet market growth to slow considerably. He expects data center products will continue to expand, led by 10GoE as it continues to grow, not only as a server connectivity technology but also as an aggregation technology within the data center. Data center deployments, including 10GoE top-of-rack for server access, will drive most of the revenue growth this year and next. Key vendors in this space include Arista, Blade, Brocade, Cisco, Dell, Extreme, Force 10, HP and Juniper.