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IDC Predicts Metro Ethernet Boom

The market for metro Ethernet equipment will quadruple over the next five years, according to a report released today by IDC.

The growth spurt's already begun: In 2002, despite the worldwide telecom spending crunch, sales of metro Ethernet rose by over 70 percent, to $837 million. The main driver was the growing popularity of Ethernet services, particularly in the Asia/Pacific region, where lots of new infrastructure's being installed as a result of demand for consumer and business access services.

It's a trend that's likely to continue, according to IDC senior research analyst Sterling Perrin, who co-authored the report. Last year, 51 percent of metro Ethernet equipment sales took place in the Asia/Pacific region; by 2007, IDC forecasts, the region will account for 61 percent of sales.

By comparison, Europe, where 27.8 percent of worldwide sales took place in 2002, will account for 24 percent of sales in 2007. North America, which claimed 18.3 percent of overall revenues in 2002, will claim just 12 percent in five years.

"The U.S. is falling behind on the data side," Perrin notes. Not only is there less consumer demand for Ethernet services stateside, but demand for Ethernet replacement of business private lines isn't up to Asia/Pacific levels.

When it comes to products, the rising tide isn't lifting all boats. Layer 2/3 switches and routers are most popular now and will continue to be, Perrin says. By 2007, he predicts, over 80 percent of all metro Ethernet gear sold will fall into these two categories.

IDC sees less promise for metro Ethernet in what it calls multiservice provisioning platforms (see Next-Gen Sonet Growing) and straight-ahead metro DWDM gear.

IDC indicates that competition will be strong, giving an advantage to vendors like Cisco Systems Inc. (Nasdaq: CSCO) and Nortel Networks Corp. (NYSE/Toronto: NT), which already have offerings in more than one of the four product categories outlined above. Other vendors, such as Alcatel SA (NYSE: ALA; Paris: CGEP:PA), which hasn't been as aggressive in rolling out Ethernet solutions, may have a row to hoe to keep up.

— Mary Jander, Senior Editor, Light Reading
douggreen 12/5/2012 | 12:55:12 AM
re: IDC Predicts Metro Ethernet Boom I spent some time with most of the major SPs in Japan a year ago. All were heavily investing in DSL and Ethernet for Internet access. It makes a lot more sense there than in the US because of short copper runs from the CO to business and availability of very cheap fiber from the CO to business. Interestingly, a lot of the Ethernet services were run point to point from business to CO using simple Ethernet fiber transceivers (very little if any monitoring, but fairly cheap).

The one quote that sticks out, however, is this:
"Internet is big bandwidth, but not big profits."
Culturaly, the Japanese are more willing to take this risk without seeing the profits (3G wireless is another example).

There is danger, however, in extrapolating this phenomenon to the rest of the world due to differences in population densities, public policy, and culture. Since Japan drove a lot of the growth in 2002, I more than a little skeptical about using 2002 numbers to predict future growth.

PS...I HOPE they are right.
lightmaster 12/5/2012 | 12:55:10 AM
re: IDC Predicts Metro Ethernet Boom hujifan,

The distinguished analyst is an ex-writer at Telecommunications magazine with a degree in English. A really nice guy, and relatively bright too, but not the background I would trust to understand what really happens in the industry. I want someone who understands the buying processes and economic drivers to be able to understand how to spin the raw data.

IDC had several telecom and datacom analysts leave the company a few years back and decided to replace them with magazine editors/journalists (e.g. Sterling, Tom Valovich, etc.). No offense to you journalists intended...

hujifan 12/5/2012 | 12:55:10 AM
re: IDC Predicts Metro Ethernet Boom http://www.lightreading.com/do...

Am i to understand that IDC believes that metro Ethernet will sell more than next-gen SONET this year (2003) ???

Can the distinguished analyst or anyone from LR shed some light on that?
optigirl 12/5/2012 | 12:55:10 AM
re: IDC Predicts Metro Ethernet Boom Gotta love those English majors working as analysts.....

They don't know what they are talking about but boy they sound good doing it, don't they?


lightmaster 12/5/2012 | 12:55:09 AM
re: IDC Predicts Metro Ethernet Boom optigirl,

Don't get me wrong... I'm not trying to say that Sterling is not a bright guy. Perhaps with 10 years of experience he may be well qualified, even without a technical background. It's just that I don't count the journalism years as qualifying experience.

IDC, on the other hand, does value his background because they sell REPORTs, which come across as more believeable if they are well written.

By the way, I highly respect and envy English majors. I personally can't spell worth ...well, you probably figured that from my posts. Anyway, we all have our talents.
Mary Jander 12/5/2012 | 12:55:02 AM
re: IDC Predicts Metro Ethernet Boom hujifan:

The article you refer to was about IDC's coverage of MSPPs, which the firm classes as part of the overall metro Ethernet segment. What's more, MSPPs are in turn part of the overall Sonet/SDH segment, not the whole thing.

After checking with IDC, it seems their take on the total metro Ethernet equipment segment - consisting
of portions of the overall Layer 2/3 switch, router, MSPP, and metro DWDM
segments - will indeed be larger than the overall MSPP segment in 2003.

And again, the MSPP
segment is an emerging market within the overall SONET/SDH market.

Hope that helps.
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