In-Stat/MDR tabs Intel as NPU market share leader

30 January 2004 Scottsdale, AZ Lightwave -- While the network processor unit (NPU) market is not quite where it had hoped to be by now, it still has a very bright future ahead of it, according to In-Stat/MDR. While 2003 is expected to finish up around $60 million, there is still a strong potential behind remaining NPU makers, and this market is expected to outpace most other silicon markets for the next 5 years.

30 January 2004 Scottsdale, AZ Lightwave -- While the network processor unit (NPU) market is not quite where it had hoped to be by now, it still has a very bright future ahead of it, according to In-Stat/MDR. The high-tech market research firm reports that an increasing number of networking protocols, needs for more service-based revenues, and a resurgence of the importance of flexibility, will keep the NPU markets growing steadily. While 2003 is expected to finish up around $60 million, there is still a strong potential behind remaining NPU makers, and this market is expected to outpace most other silicon markets for the next 5 years.

"The NPU market has gone through some fairly radical changes. What started as a tiny market, swirling with hype and built around a dozen startups with revolutionary technologies, has now become a sizable market being driven by established chipmakers that are relying on time-tested principles for success," says Eric Mantion, a senior analyst with In-Stat/MDR. "Key among the proven concepts is that, in order for high-intelligence devices to thrive, there must be a complete ecosystem in place. Companies like Intel and Motorola are taking lessons learned from other processors and applying them to NPUs. For some companies, like Vitesse and IBM, the effort of creating an ecosystem has proven to be more hassle than it was worth, so they have exited the market."

Mantion notes that one of the most interesting transitions in this market is the move made by Intel from fourth place in the NPU market in 2002 to first place in the first half of 2003. "This strong growth by Intel amidst a mostly flat market from 2002 to 2003 exemplifies the importance of having a strong ecosystem around your NPUs," says Mantion. Other companies that gained market share over the same time period were Motorola and Agere. Each company is expected to grow at a healthy rate since they both have ancillary silicon products from which they can gain strength. For example, Motorola can depend on its strong base of PowerQUICC communications processors, which earned more revenue for the company in 2003 than the entire NPU market will reach by 2007.

In-Stat/MDR has also found that:

  • With the release of the Advanced Telecom Computing Architecture (AdvancedTCA) standard for chassis by the PCI Industrial Computer Manufacturers' Group (PICMG), merchant silicon -- such as NPUs, traffic managers, switch fabrics, and others -- can create reference designs that are easier to work with and better understood by various OEMs. It is anticipated that the NPU vendors will leverage this as a tool to reduce the time to market for their customers.
  • Not only are OEMs in the United States looking at NPUs again, but there's also been a lot of attention coming from overseas -- especially China.
  • The NPU makers that will be most successful are the ones that can offer a complete NPU/traffic manager/switch fabric solution, either by themselves or through strong strategic alliances.
  • Metro NPUs are just at the beginning of the strong growth phase of their life cycle. Companies in this sector will remain the primary influencers of the NPU market until the core NPUs enter their growth phase sometime in 2005.

The report, "The Reincarnation of the Network Processor Market" (#IN030848NT), examines 25 different markets to determine the path that NPUs are most likely to take. The report is priced at $3,995.

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