Probe Group expects quiet recovery for core routing and switching market

7 July 2003 Cedar Knolls, NJ Lightwave -- Analyst firm Probe Group forecasts recovery for the core router and switch market--albeit a quiet one--thanks to increased traffic and a limit to the currently installed capacity. Barring major international incidents or economic problems, growth should return by the end of 2003.

Jul 7th, 2003

7 July 2003 Cedar Knolls, NJ Lightwave -- Analyst firm Probe Group forecasts recovery for the core router and switch market--albeit a quiet one--thanks to increased traffic and a limit to the currently installed capacity. Barring major international incidents or economic problems, growth should return by the end of 2003. Probe reports compound annual growth rates of 35% in router revenue and 25% in switching revenue over the 2002-2007 period.

"Developments in routers and switches at both the core and edge are being driven by a number of trends that focus on efficiency, lower cost of ownership, greater manageability of platforms, and higher router and switch speeds," explains Probe vice president Richard Endersby.

The core router market has effectively become a duopoly. Start-ups such as Pluris and Charlotte's Networks faded during 2002 and filed for bankruptcy. "As has been predicted for some time at Probe, the network core appears able to support only two players," Endersby reports.

The ATM/multiservice switch market is seeing a transition from a market dominated by Lucent to one that is controlled by Nortel and Alcatel.

"Predictions have been made for the past few years that ATM will soon be eliminated from service provider networks, replaced by IP [Internet Protocol]. But it has survived in the core of many a service provider network for a number of reasons," says Endersby. "While it is a given that most service providers will indeed make the transition to IP core routers, this is expected to be a slow process. Not only do service providers have to tackle the myriad problems of managing to move such a crucial part of their business to another platform/technology, but the business model of many service providers is under attack as margins and revenues fall away. The resultant capex reductions have forced many service providers to postpone decisions, but, conversely, the delay may have allowed these vendors to come to market with better-thought-out and more resilient solutions."

Despite the poor market conditions of the past several years, startups have continued to move into the market; Caspian, Procket and Equipe all have product in the space, for example, but all have yet to see major revenues.

In its latest Global Internet Infrastructure Markets report, "Core Switching and Routing Market Forecast," Probe analyzes the core router and multi-service switch market, offering forecasts by geographic region in addition to vendor market share. For more information, visit www.probegrp.com.

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