Ethernet equipment

Carrier Ethernet Continues Climbing

Despite the danger of soft U.S. demand, the carrier Ethernet market looks sharp for the next five years, according to the latest Carrier Ethernet Switch/Router Quarterly Market Tracker from Heavy Reading.

Sales of carrier Ethernet switch/routers grew 25 percent from 2006 to 2007, with the pace expected to level off to 20 percent annual growth between 2007 and 2012, analyst Stan Hubbard writes in the report.

CESR revenues reached $508 million in the fourth quarter of 2007. The number might look familiar, since it was reported as the previous quarter's CESR take. (See CESR Sales Crack $500M.) Heavy Reading did some revising, pushing the third-quarter figure down to $498 million.

Heavy Reading subtracted some Ciena Corp. (NYSE: CIEN) revenues that really belonged in the Carrier Ethernet Access Platform (CEAP) category -- which got its own tracking report starting in February. And it revised estimates for Atrica Inc. , as Nokia Networks has revealed the startup's lifetime revenues to be $90 million -- less than expected, Hubbard notes.

As for the future outlook, Hubbard actually lowered his predictions a bit, figuring the weak U.S. dollar could put some sales at risk.

But it's still all smiles for Ethernet growth. As Hubbard noted earlier this week at Ethernet Expo Europe, he still expects the CESR market to reach $4.5 billion in 2012, from $1.9 billion in 2007. (See Ethernet Gear Market to Double.)

And some of the wealth was spread around last quarter, as market share for Cisco Systems Inc. (Nasdaq: CSCO) fell a little. Emphasis on little. Cisco's 54.2 percent share in the fourth quarter still dominated, although it was down from 58.6 percent in the third quarter.

Among the big winners in the quarter was Alcatel-Lucent (NYSE: ALU), popping up to a 20.3 percent market share, although that's still down from the 24 percent it enjoyed early in 2007.

And Ciena, despite having less than 1 percent CESR market share, is on the rise. Hubbard thinks the LE-3300 platform, spoils of the World Wide Packets acquisition, looks to be a CESR flagship for Ciena -- and one that supports Provider Backbone Transport (PBT), to boot. (See Ciena Takes Out World Wide Packets, Did Ciena Overpay for WWP?, and WWP Combines MPLS, PBT.)

"We suspect that many on Wall Street have focused only on the Ethernet access portion of WWP’s portfolio and may not be aware of the potential for Ciena to generate significant CESR sales," Hubbard writes.

For more information on the Carrier Ethernet Switch/Router Quarterly Market Tracker, click here.

— Craig Matsumoto, West Coast Editor, Light Reading

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