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Router Sales Dropped 2% in 2004: Report

Revenues from enterprise router sales slipped slightly last year, according to new research from Infonetics, down 2% to $3.4 billion over 2003.

Nevertheless, Infonetics Research's "Enterprise Routers" quarterly worldwide market share and forecast report found that the drop in revenues was accompanied by an increase in the number of units shipped which rose 4% in the same period, and was up 8% quarter-over-quarter. Moreover, Infonetics expects revenues to return to the 2003 level of $3.5 billion next year, experiencing a compound annual growth rate of 1% over five years to reach $3.8 billion in 2008.

While overall router revenue dropped last year Infonetics' directing analyst for enterprise voice and data Matthias Machowinski observed that there was notable growth in secure router sales, and he expects this trend to continue. "Twelve percent of 4Q04 enterprise router revenue came from the sale of secure routers, up a percent from 3Q04," Machowinski said in a statement. "We project secure routers to continue to take up a growing slice of the router revenue pie, accounting for 29% of total router revenue by 2008. Over time, router vendors could add security features into their routers as a default offering, at no extra charge, causing the standard enterprise router category to disappear."

Cisco Systems continued to consolidate its dominance in the enterprise router market, gaining a point of market share in the last quarter, and claiming 84% of revenues and 77% of units shipped in 2004. Cisco's closest competitors are Vanguard, a distant second in revenue share with 1%, and Allied Telesyn, which was second in units shipped in 2004 with a 5% share.