The 10-Gbit/s Ethernet market saw a massive shift in the fourth quarter of 2003, with Cisco Systems Inc. (Nasdaq: CSCO) regaining the lead from Foundry Networks Inc. (Nasdaq: FDRY) as prices nose-dived, according to research reports released this week.

The reason? A four-port line card, first announced in March, finally began shipping, and it was a hit (see Cisco Takes On 10 GigE Competition).

"The average price [per port] in the third quarter was about $23,800. The Cisco piece that sold so well was a $20,000 module that had four 10-Gbit/s ports on it," says Joshua Johnson, analyst with Synergy Research Group Inc. Cisco sold a lot of the four-port cards, enough to overtake Foundry in 10-Gbit/s Ethernet revenues for the quarter, according to Synergy.

Similarly, Dell'Oro Group noted a 60 percent decline in 10-Gbit/s Ethernet average prices and a quadrupling of port shipments during the quarter. Prices have fallen by more than $30,000 per port since the end of 2002, Dell'Oro reported. (See Dell'Oro: 10 Gbit/s Prices Slump.)

Cisco began the quarter trailing Foundry in both port shipments and revenues for 10-Gbit/s Ethernet switches. By the end of the quarter, Cisco had beaten out Foundry in revenues and utterly dominated in terms of ports shipped:

Table 1: 10GE Switches, Market Share by Revenues

Table 2: 10GE Switches, Market Share by Ports Shipped

Cisco's four-port card is hardly perfect. The ports can't all run at line speed, and the card has less functionality than its two-port sibling -- factors Cisco disclosed in March. One competitor noted that it also requires a daughter card that tacks $7,000 to $8,000 to the price, although that's still lower than typical 10-Gbit/s offerings.

Other companies have four-port offerings, naturally. Foundry officials say they've got such a line card shipping, albeit at a price higher than Cisco's; and Force10 Networks Inc. has been developing a four-port card as well.

Speaking of which -- both research firms show Force10 making a strong showing, materializing from zero-revenue territory at the beginning of the year. Synergy's numbers show Force10 in third place, passing Extreme Networks Inc. (Nasdaq: EXTR) in market share by both revenues and ports shipped.

Extreme's lost ground could be temporary. "Their customer base was waiting for the BlackDiamond 10K to come out, and that didn't ship until late in the quarter," Johnson says. "We'll see sort of a comeback next quarter." (See Extreme Touts BlackDiamond 10K, Extreme Expects Revenue Dip, and Extreme Posts Q2 Loss.)

Dell'Oro shows Extreme in third place by ports shipped, but it should be noted that the two reports aren't equivalent. Synergy's tracks LAN switches only, while Dell'Oro is looking at Ethernet shipments in all contexts.

The overall LAN switch market fell 3 percent to $11.2 billion in 2003, according to Synergy, but that's no reason to panic, Johnson says. "It's really a constant level of spending," he says, noting that overall port shipments grew by 17 percent in 2003.

— Craig Matsumoto, Senior Editor, Light Reading