Dell'Oro Group releases new studies on router, Ethernet switch, access equipment, and optical transport markets

February 1, 2002--Market research firm Dell'Oro Group recently released five studies covering the worldwide router, Ethernet switch, access equipment, and optical transport markets.

Feb 1st, 2002

Market research firm Dell'Oro Group recently released five studies covering the worldwide router, Ethernet switch, access equipment, and optical transport markets.

Ethernet switch forecasts

Dell'Oro Group analysts predict that the Ethernet switch market will grow marginally in 2002 but return to stronger growth in 2003. Worldwide Ethernet switch sales are expected to increase from their $11.5-billion mark in 2001 to $18.9 billion by 2006.

The desktop upgrade market will accelerate growth in 2003, claims Dell'Oro. There was a very strong upgrade market in 1999--when switched Ethernet grew $2.7 billion and port shipments grew by $31 million, driven by Y2K purchases, mergers and acquisitions, headcount growth, and infrastructure installations to leverage Internet-based applications. Given a 4-5 year product lifecycle, equipment purchased in 1999 should be upgraded in 2003 or 2004, and this upgrade will be facilitated by lower prices on key technologies.

"While current prices of some key upgrade technologies are still too high for volume adoption, we predict that by 2003, prices will have declined enough to promote a rebound in the market," claims Dell'Oro analyst Seamus Crehan. These technologies include 10- Gigabit Ethernet, Gigabit Ethernet over Copper, and some Layer 3 Ethernet switches.

DWDM long-haul terrestrial market projections

Dell'Oro's Optical Transport 5-Year Forecast Report projects that the DWDM long-haul terrestrial market will decline in 2002, remain flat in 2003, and then experience steady growth (a 14% compound annual growth rate) to reach $6.4 billion by year-end 2006.

"Excess network capacity and lower capital expenditures by telecommunications service providers will keep the DWDM long-haul terrestrial market subdued through 2003," claims Shin Umeda, principal analyst at Dell'Oro. "We expect market growth to resume in 2004 when these issues are alleviated."

The Optical Transport 5-Year Forecast Report details revenue, unit, and price forecasts for various technologies, including DWDM for the long-haul terrestrial and metro markets and SONET/SDH multiplexers.

The future of access equipment sales

Sales of cable modem, dial modem, and DSL access equipment are forecast to grow from $7.8 billion in 2001 to $11.1 billion in 2006.

"We remain positive about the long-term growth prospects for access equipment, despite the expected near-term market declines in 2002," contends analyst Paul Baranello. "Future equipment demand will be driven by end users switching from dial modem access to newer, faster broadband access technologies, like cable modem and DSL. This transition has only begun and will continue for years to come. While the number of cable modem and DSL subscribers has grown substantially over the past year, it is still dwarfed by the number of dial modem subscribers," he adds.

The Access 5-Year Forecast Report offers an overview of the industry with tables covering revenue, unit, and price forecasts for various technologies, including DSL, cable modem, and dial modem.

Expectations for worldwide router sales

According to a report from Dell'Oro Group, the worldwide router market sales are forecast to increase from $7.9 billion in 2001 to $11.4 billion in 2006. Dell'Oro Group estimates that approximately $4 billion of sales will shift from lower bandwidth to higher bandwidth routers.

"The single largest trend impacting the router market over the new few years will be service providers (SP) replacing their installed base of routers," says Tam Dell'Oro. "Between 1998 and 2001, we estimate that tens of thousands of units of routers were shipped to SPs. The majority of those routers are reaching the end of their useful life, primarily because their relatively low bandwidth cannot support the increasingly common port speeds in SP networks (i.e., OC-48/STM-16, 1000 Mbits/sec Ethernet, etc.). We expect SPs to replace the bulk of these units with higher bandwidth units (e.g., routers over 10 Gbits/sec) over the next 5 years," he claims.

The Routers 5-Year Forecast Report covers revenue, unit, and price forecasts for various technologies, including routers that can support less than 9 Gbits/sec of bandwidth, greater than 9 Gbits/sec of bandwidth, and WAN Switches

For more information about the Dell'Oro Group (Redwood City, CA), visit the company's Web site at www.delloro.com.

More in Market Research