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Enterprise Router Shipments Increase 10%, But Revenue Drops

Worldwide enterprise router unit shipments increased 10% in the third quarter of 2004, but revenue is down and will not return to 2003 levels until 2007, concludes a report from Infonetics Research.

The report also found that Cisco continues to dominate the enterprise router market, accounting for three-quarters of the worldwide revenue share and almost a fifth of the unit market share. D-Link was the leader in unit market share, with Linksys (owned by Cisco) close behind, and in second place for revenue. Netgear is in fourth place for worldwide unit shipments

Infonetics Research projects that revenue for enterprise routers will dip 4% between 2003 and 2004, to $3.8 billion, and will not return to the 2003 level of $3.9 billion until 2007. It says that secure router categories will have slightly higher growth rates than standard router categories through 2007, increasing revenue from a 12% portion of the total router market in 2003 to 14% in 2007. As router vendors add security features into routers as a default offering, the standard enterprise router category will disappear.

In all, 48% of enterprise router revenue comes from high-end routers, 39% from mid-range, 3% from low-end/SOHO, and 10% from wired broadband gateways.

"Cisco continues to dominate the router world quarter over quarter," Infonetics Research's Matthias Machowinski, directing analyst for enterprise voice and data said in a statement. "The competition is introducing products up and down the enterprise router categories, offering end-users more choices and features at aggressive prices. Cisco faces the most competition in the low-end/SOHO categories, pressured by the commoditization of low-end routing and more sales channels."