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Ethernet equipment

Carrier Ethernet Surges in 2005

That whole "rising tide" thing is playing out oddly for some carrier Ethernet vendors, as numbers from Heavy Reading indicate some are losing market share even as their revenues continue to grow.

The numbers were released last week in Heavy Reading's "Carrier Ethernet Switch/Router Quarterly Market Tracker, 4Q05." Heavy Reading measured the overall carrier Ethernet market at $637 million in 2005, tripling the previous year's figure. (See CESR Market Tripled in '05.)

A similar study from Infonetics Research Inc. put the carrier Ethernet market at $2 billion a year, but that survey uses a wider definition of "carrier Ethernet" gear, Heavy Reading analysts say. (See Carrier Gear Nears $10B.) The idea in both reports is to separate carrier Ethernet -- designed for service providers, with features such as QOS, resiliency, or monitoring -- from the ordinary Ethernet equipment suitable for local-area networks.

In the Heavy Reading numbers, the culprit skewing the market share ranks is Alcatel (NYSE: ALA; Paris: CGEP:PA), which came from nowhere to gobble up 20 percent of the carrier Ethernet switch and router market in 2005. That ate into the market share figures of Atrica Inc. and Riverstone Networks Inc. (OTC: RSTN.PK) , both of which had been frontrunners a year ago.

That's not necessarily bad news for the smaller fish. Atrica has continued to grow steadily, recording an estimated $10 million in revenues for the fourth quarter of 2005, according to the report. But the market grew much faster, causing Atrica's market share to shrink -- to 4.4 percent last quarter from 10.9 percent a year earlier.

"That's an interesting dynamic," says Heavy Reading analyst Stan Hubbard. "You can grow revenue and lose share, but still feel pretty good about your business."

Riverstone, by contrast, has sprung a leak, with revenues declining for the last half of 2005. That brought Riverstone's market share down to 6.9 percent, the report reckons, compared with 22.2 percent at the end of 2004.

Not surprisingly, the carrier Ethernet market leader was Cisco Systems Inc. (Nasdaq: CSCO), with 48 percent share in the fourth quarter.

Most of the carrier Ethernet growth has been in Europe, where triple-play broadband buildouts are most prevalent, according to the report. "We're getting close to a point where just about half the sales [of carrier Ethernet gear] are from residential triple play" as opposed to enterprise services, Hubbard says.

Along those lines, he notes, Siemens AG (NYSE: SI; Frankfurt: SIE) is bringing triple-play offerings to the market, making it a company to watch this year. A few others are preparing 2006 product launches, which will deepen the pool of competitors.

"The longer-term goal is obviously to run both the triple play and the enterprise services over a single infrastructure. That is a trend we started seeing pick up for 2005," Hubbard says. Companies working in that direction include PCCW Ltd. (NYSE: PCW; Hong Kong: 0008) and Telefónica de España . A more prominant example is the 21CN project at BT Group plc (NYSE: BT; London: BTA).

— Craig Matsumoto, Senior Editor, Light Reading

chips_ahoy 12/5/2012 | 4:05:19 AM
re: Carrier Ethernet Surges in 2005 can someone tell me: where do you find CE? would it be more associated with a core router, wan router, or is it it's own animal altogether?

thanks!
mr c
chips_ahoy 12/5/2012 | 4:05:19 AM
re: Carrier Ethernet Surges in 2005 can someone tell me: where do you find CE? would it be more associated with a core router, wan router, or switch?

thanks...
mr c
Pete Baldwin 12/5/2012 | 4:05:19 AM
re: Carrier Ethernet Surges in 2005 So -- who do y'all think is going to jump into the carrier Ethernet market next? Don't say Juniper ...
OldPOTS 12/5/2012 | 4:05:18 AM
re: Carrier Ethernet Surges in 2005 chips_ahoy,

If you mean Customer Equipment functionality associated with a router the functionality is usually provided on a router at the subscriber by the SP or on a router provided by the subscriber depending on the SP/subscriber agreement.

If you mean Circuit Emulation? (ATM/FR)
It's replacement in Ethernet/IP networks is called 'pseudowire'. It is normaly provided at the subscriber premise at an interface on CPE gear or SP equipment.


OP
jes 12/5/2012 | 4:05:18 AM
re: Carrier Ethernet Surges in 2005 i think its edge router/aggregation.
chips_ahoy 12/5/2012 | 4:05:15 AM
re: Carrier Ethernet Surges in 2005 thanks OP. that's exactly the info that i was looking for.
Viewpoint 12/5/2012 | 4:05:13 AM
re: Carrier Ethernet Surges in 2005
Back in the days of yore (3-4 years back) when I was still in Telecom, very few carriers, MEF and venture captialists really understood challenges of rolling out Ethernet as a carrier service. Not sure if anything as changed since then.

If Lightreading has some other article regarding what Carrier Ethernet really entitles, I have missed it.

The story hardly tells anything about Carrier Ethernet. I don't remember Cisco putting in features required for the Carrier Ethernet in their 6000 or 4000 series Catalyst line. What CPE devices is offered by Cisco and others for Carrier Ethernet deployment. What kind of SLAs are so called carriers providing for CE and how are they enforced. Who is using CE and for what purpose/applications.
filipe 12/5/2012 | 4:05:09 AM
re: Carrier Ethernet Surges in 2005 who else of the big boys could be looking to acquire a carrier ethernet provider??
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