August 2, 2004 Redwood City, CA -- Market research firm Dell'Oro Group has released five-year forecasts for the Ethernet switch market and the router market, both of which will experience double-digit growth through the forecast period.
Ethernet switch market to return to growth
In a newly published report, Dell'Oro Group predicts that in 2004 the worldwide Ethernet switch market will see 14% year-to-year growth, following three consecutive years of revenue declines.
"As a result of aggressive price reductions, Gigabit Ethernet will become the largest revenue and port shipment contributor to the overall market, with Gigabit Ethernet over copper seeing more widespread deployment in connecting desktop PCs to the LAN," reports Seamus Crehan, director of Ethernet switch research at Dell'Oro Group.
"Bandwidth continues to become a commodity; however, with the incorporation of more application-specific intelligence, such as Voice-over-IP, security, and wireless LAN, switch manufacturers will achieve more differentiation and price protection."
According to the Dell'Oro Group report, part of the unusually strong revenue increase in 2004 is due to supply constraints that caused delays in shipments from late 2003 to early 2004. The report also indicates that the actual demand growth is more gradual than the 2004 revenue growth rate would indicate.
Worldwide router market to net $9.2 billion by 2008
In a related report, Dell'Oro Group predicts that the worldwide router market will grow from $6.3 billion in 2003 to $9.2 billion in 2008. Telecommunications and Internet service providers will contribute the largest proportion of the growth, increasing their router purchases at an average annual rate of 14% from 2003 to 2008, a rate approximately three times greater than the rate that enterprises are projected to increase purchases.
"The proliferation of broadband Internet access is pushing service providers to continuously expand their Internet protocol networks," explains Shin Umeda, principal analyst of routers research at Dell'Oro Group. "Since bigger and faster routers are needed to keep up with the IP traffic generated by the rising number of subscribers, routers deployed at the core of the network will increase almost 50% in 2004, but longer term it is those deployed at the edge that are the growth engine."
For more information about Dell'Oro Group's "Ethernet Switch 5-Year Forecast Report" or the "Routers 5-Year Forecast Report," visit www.delloro.com.