Network Computing is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Ethernet Switch Sales Up, Led By Cisco

Analysts are saying that 2010Q1 and 2009Q4 sales figures of Ethernet hardware such as switches and routers are up, in some cases approaching pre-recession levels. While the analysts don't go so far as to say the recession is over or that this is a full recovery, they are saying things are getting better, which they attribute  to factors such as improvements in the economy, pent-up demand and a reduction in backlog. Technological drivers include the growth of voice and video over IP, network-based businesses and applications, network-attached devices, virtualization and cloud computing. Leading the upward trend is Cisco, who holds the largest share of the market.

Ethernet switch sales were up 15 percent in Q4, and up an additional 12 percent in Q1, according to Matthias Machowinski, directing analyst for Enterprise Voice and Data at Infonetics Research. On a year-over-year basis, Ethernet switch manufacturer revenue is up 41 percent in 1Q from its recession-induced low a year earlier, he says, and while worldwide revenue from all families of routers held steady in Q1, after a 10 percent increase in Q4, enterprise routers are up 4.5 percent from the previous year. Cisco increased its Ethernet switching revenue 17 percent in Q1 and had an even bigger jump in Q4, bringing its overall revenue market share to 72.3 percent.

IDC agreed that Q1 was an exceptionally good quarter for Ethernet switches, particularly since the first quarter tends to be weak. According to IDC figures, market revenue increased 35.3 percent year over year, and 9.2 percent over the previous quarter, reaching a total of $5.3 billion. "This is just below the record level we saw in 3Q08 and quite a jump from the $3.9 billion in the very weak 1Q09," IDC reports. In addition, port shipments increased 19.5 percent over the previous year. The company also notes that revenues increased in all geographic regions and market segments, which it found encouraging.

Gartner is planning to publish its Q1 Ethernet switch report in June, but Cisco is definitely up compared to Q4, says Severine Real, senior research analyst for Ethernet switches. "The market tends to be driven by Cisco, because they have a huge revenue share," she explains. "If Cisco is growing, usually it means the market is growing as well." She adds that while 2009 was quite bad, things are slowly getting back to where they were before the economic crisis, with Q4 up compared to Q3 in 2009 and Q1 appearing to be up as well.

While analysts aren't making any short-term predictions about Ethernet switch revenue in the near future--even as far as the next quarter--IDC sees the general outlook as being positive in the longer term, noting that network upgrades are ranked in the top two IT priorities for 2010. The company predicts that revenue in Ethernet switches will reach $22.9 billion by 2014 as applications converge on the Ethernet network, according to Lucinda Borovick, IDC research vice president, Datacenter Networks.