SAN JOSE, Calif. -- Worldwide shipments of DSL IADs jumped 301% to 420,000 and revenue increased 120% to $55.5 million between 2Q04 and 3Q04, according to Infonetics Research's DSL CPE quarterly worldwide market share and forecast report.

"In response to competition from cable MSOs and from each other, several major DSL service providers rolled out VoIP over DSL services faster than expected, resulting in a big boon for DSL IAD vendors, who saw phenomenal third quarter shipment growth," said Richard Webb, directing analyst and lead author of the report. "Much of the early DSL IAD growth has been in Asia Pacific, but it's beginning to accelerate in North America and EMEA."

The overall DSL CPE market maintained rapid growth as well, with worldwide shipments of DSL CPE growing in the double-digit percents for the second consecutive quarter. DSL CPE units grew 29% and revenue grew 20% between 2Q04 and 3Q04. Siemens maintained its lead in worldwide revenue market share for overall DSL CPE.

"The strong growth in the overall DSL CPE market is being fueled by service providers hustling to capitalize on their huge installed base of DSLAM and next gen DLC DSL ports, but to achieve this growth, CPE prices continued to fall this quarter," Webb continued. "We expect the momentum behind DSL to accelerate in 2005, as higher functionality DSL CPE decreases in price and broadband users upgrade from basic ADSL modems to units with wireless, voice, or VDSL/G.SHDSL CPE."

In a separate DSL Aggregation Hardware study, Infonetics reported worldwide DSLAM, next gen DLC, and BLC port shipments increased 11% to 14.9 million in 3Q04, following a 12% decline in 2Q04, and revenue increased 5% to $1.3 billion.

"Two long-term shifts are occurring in the DSL aggregation market," said Michael Howard, principal analyst of Infonetics Research and author of the DSL Aggregation Hardware report. "First, ATM DSLAMs are generally on the decline, while IP DSLAMs are on the rise, with IP DSLAM revenue surpassing ATM DSLAM revenue by 2007. Secondly, next gen DLCs are declining, while broadband loop carriers (the successors to next gen DLCs) are climbing, with BLC revenue surpassing next gen DLC revenue by 2007."

Despite declines in the ATM DSLAM and next gen DLC segments, the DSL market is strong, and will continue slow but steady single-digit annual port and revenue growth through 2007.

"Many parts of the world, such as South America, China, and India, have small DSL penetration, while high penetration countries like Korea and Japan are deploying higher speeds to existing customers, pushed by gamers and video demand," Howard continued.

3Q04 DSL Aggregation Hardware Market Highlights

The DSL Aggregation Hardware and DSL CPE reports track DSL CPE, ATM DSLAMs, IP DSLAMs, next gen DLCs, and BLCs. Worldwide and regional market share and forecasts are updated quarterly and cover all regions (worldwide, North America, EMEA, Asia Pacific, CALA).

Companies tracked in these reports include ADTRAN, AFC, Alcatel, Cisco, Corecess, D-Link, Fujitsu, Lucent, Marconi, Motorola, NEC, Netopia, Nokia, Samsung, Siemens, Sumitomo, Thomson Multimedia, US Robotics, UTStarcom, and many others.

Infonetics Research Inc.