Market fall expected for edge routers and multiservice switches

July 9, 2002--The edge router and multiservice switch markets are ready for a fall, according to Probe Research (Cedar Knolls, NJ). The market researcher anticipates a 13% drop in revenue for edge routers and a 16.5% decrease for multiservice switches from 2001 to year-end 2002 as the CapEx spending slowdown will persist throughout this timeframe.

Jul 9th, 2002

July 9, 2002--The edge router and multiservice switch markets are ready for a fall, according to Probe Research (Cedar Knolls, NJ). The market researcher anticipates a 13% drop in revenue for edge routers and a 16.5% decrease for multiservice switches from 2001 to year-end 2002 as the CapEx spending slowdown will persist throughout this timeframe.

The continued strong growth - or not - of Internet traffic has been one of the essential issues at the heart of the debates surrounding the collapse in demand for infrastructure equipment. "IP traffic is still expected to increase considerably, but not at the percentage rates experienced during the early days of the Internet's growth," states Richard Endersby, vice president, Internet Access and Edge Infrastructure. "Indeed, Probe has warned for some time of the impact of traffic localization on the core routing/ switching business, in addition to the impending slowdown in the U.S. backbone traffic growth rates."

Endersby reflects on some of the problems causing the sharp downturn. "High capital expenditures have resulted in overcapacity in the networks which, when combined with the overabundance of new networks in the three major world regions, have largely been responsible for the decline," he says. "The dot.com crash, the subsequent service provider failures and the shock dealt to those vendors heavily indebted to their customers further make for a precarious environment. Financing has become more difficult to obtain as many venture capitalists have adopted a 'triage' mentality in financing only those companies that can truly deliver on what they promise. To make matters worse, a large amount of used equipment is being resold either by dedicated agents or on ISP mailing lists or eBay and Yahoo! auction sites."

But it is not all doom and gloom on the horizon. Endersby is quick to point out that after 2002 the market will begin to pick up and by 2006 he expects a growth of 187% for the edge router market and a 112% increase in edge switching devices. To obtain more information visit Probe on the web at www.proberesearch.com.


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