SAN JOSE, Calif. -- Demand for 1G fixed configuration and 1G and 10G chassis switches was strong in 4Q03, but not strong enough to keep worldwide revenue for layer 2-3 Ethernet switches from dipping 1% from 3Q03 to 4Q03, according to Infonetics Research's quarterly market share and forecast service, L2-L3 Ethernet Switches. The decline was due to sagging sales of 100M fixed and chassis switches. Despite flat revenue numbers this quarter, worldwide L2-L3 Ethernet switch revenue topped $11.6 billion in 2003 and is projected to grow to $14.2 billion in 2007. Vendors report that end-users are starting to increase their spending on network infrastructure at modest levels, which will drive 28% port and 11% revenue growth in 2004.
"The big story this quarter is how dramatically Cisco reclaimed the lead in the 10G chassis segment by creating a higher density blade and slashing the price per port," said Infonetics Research's Neil Osipuk, lead analyst of the report.
"After experiencing two quarters of revenue and port market share decline and losing the lead in the 10G chassis segment to Foundry, Cisco increased its revenue market share from 39% in 3Q03 to 50% in 4Q03, and their port market share from 40% to 77%. A diversified company like Cisco can afford to make lower margins in emerging areas like 10G, so the battle is really just beginning for the more specialized companies like Foundry. But regardless of who takes top position in this market, lower prices will certainly help boost adoption for 10G technology."
4Q03 Market Highlights
Cisco is the worldwide leader in the L2-L3 Ethernet switch market, with 59% revenue market share and 35% port market share (a slight decrease from their 3Q03 levels)
HP has second place in revenue market share with 9%, while NETGEAR maintains second place for port shipments at 14%, just ahead of 3Com's 13% port market share
10G chassis switch revenue grew the most, 63% from 3Q03 to 4Q03, with Cisco and Foundry in the top two revenue market share positions
10G (fixed configuration and chassis) has the highest forecasted revenue growth between 2003 and 2007 across all regions
1G fixed configuration switch revenue grew 17% from 3Q03 to 4Q03, and is projected to grow 61% between 2003 and 2007, from $1.5 billion to $2.4 billion
Infonetics Research Inc.