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Comms chips

Ethernet Rules Switch Fabric Market

The market for switching devices, including electronic switch fabrics and small all-optical protection switches, is approaching $1 billion per year and should reach $1.5 billion by 2008, according to a report released yesterday from Communications Industry Researchers Inc. (CIR).

Nearly half that market consists of Ethernet switches, an area dominated by Broadcom Corp. (Nasdaq: BRCM) and Marvell Technology Group Ltd. (Nasdaq: MRVL), although Agere Systems Inc. (NYSE: AGR.A), SwitchCore AB (Stockholm: SCOR), and Vitesse Semiconductor Corp. (Nasdaq: VTSS) are trying to make inroads here.

Very little of the market is dedicated to the traditional TDM switching elements inside older add/drop multiplexers and digital crossconnects.

"Most of the activity these days in telecom/datacom is on the datacom side, in the enterprise. That's where the money is being spent, even in things like WDM that are traditionally associated with the telecom network," says CIR analyst Lawrence Gasman.

The report gloms together all kinds of switching, so it's instructive to see the breakout of sectors:

Table 1: Switch Fabric Revenues, in $M
2003 2004 2008
Optical
Signal Switching 7.3 13.0 53.6
Protection Switching 69.8 73.4 88.8
TOTAL 77.1 86.4 142.3
Electronic
TDM 14.9 15.6 19.0
Ethernet Only 439.6 458.8 651.4
Fibre Channel Only 39.3 41.4 69.7
Multiservice
(off-the-shelf)
136.8 160.7 384.9
Multiservice (ASIC) 190.4 188.7 207.3
TOTAL 821.0 865.2 1,332.3
TOTAL 898.1 951.6 1,474.6
Source: CIR




The area most closely pertaining to merchant switch fabrics -- the packet-processing devices, related to network processors, that are sold by Applied Micro Circuits Corp. (AMCC) (Nasdaq: AMCC), Agere, and others -- would fall mostly in the "Multiservice off-the-shelf" category. For that sector, the figures are in the same ballpark as those provided by The Linley Group in January. Linley analyst Jag Bolaria pegged merchant switch fabrics at a $250 million market in 2007 (see Report Names Switch Fabric Winners ).

So, is Ethernet the hot market for new switch startups? Not really, because of the rapid price drops in that market. "A fair chunk of [the Ethernet revenue pool] is Layer 1 and Layer 2 switches from Broadcom and Marvell -- off-the-shelf stuff where volume production is all that matters," Gasman says. "The areas new companies are looking for are where they can distinguish themselves more."

The figures also show that all-optical switching isn't dead, although the category consists mostly of the 1x2 and 2x2 devices used for protection switching.

— Craig Matsumoto, Senior Editor, Light Reading


Archive of Related Light Reading Webinar:

allip 12/5/2012 | 1:32:02 AM
re: Ethernet Rules Switch Fabric Market As the title of the resport suggests, Ethernet is ruling the SF market.

Given this fact, can somebody (Mr Lawrence) throw some light on the use of Packet/Cell based SF. What is the dominant kind of architecure being used. I understand that the workgroup switches use packet based SF, but am not sure how do packet based SF perform in high end metro ethernet switches. ASIC based SF are pre-dominantly cell based to meet the low latency requirements.

Another question is related to Advanced-Switching(AS) (asi-sig). What is the traction for AS based SF.

thx
allip
Lawrence Gasman 12/5/2012 | 1:32:26 AM
re: Ethernet Rules Switch Fabric Market There is an intrinsic problem that whenever LR posts data from a market research report from us (or anyone else) it is subject to misunderstandings because readers don't get to see the whole thought process and assumption behind the numbers. All they get to see is bottom line numbers. On the other hand we are always delighted when LR gives the opportunity for our numbers to be critiqued by a wider audience and hopefully the process is useful to the audience too.

That said The commentators below raise some interesting questions that deserve answers.

The comment below on ASIC "markets" is a good case in point. ASICs do not form a market in the same sense that merchant silicon does. We included a value for this part of the market, since (1) we wanted to give a comprehensive view of the value of switching chips being consumed for completeness sake and (2) It represents dollars which could potentially go to merchant silicon if OEMs were to change their sourcing policy. (Incidentally, all we did to get the ASIC value was to multiply volume of ASICs shipped by what we thought was a reasonable estimate of cost.)

On the "multiservice" switches, it's a little hard to see how those numbers could be much lower and I note that the article makes the point that another consulting company has come up with similar figures. (I actually didn't know this until I read this piece.)

The "Ethernet switch" segment does include lots of small port count devices as someone suggested, which is why it is big and it is based on CIR's estimates of Ethernet shipments. This was actually the hardest part of the market to get good data from, especially with regard to ASPs.

Lawrence Gasman
CIR
enews_pbx 12/5/2012 | 1:32:37 AM
re: Ethernet Rules Switch Fabric Market Maybe this is a dumb question, but I am not sure I understand the Multiservice ASIC segment. Given that the other segment is Multiservice (Off-the-shelf), does Multiservice ASIC include vendors (like Cisco etc) who make their own ASICS. If so, I don't think it would be even right to call it a market as the ASICS are never 'sold'.

I am obviously missing something here. Would be glad to have thoughts from others.
icenine 12/5/2012 | 1:32:42 AM
re: Ethernet Rules Switch Fabric Market The report does not say what segments of equipment are being served. It probably includes those 8p and 24p 10/100 switches you buy at Frys, all the way thru the HFR (or whatever it is now called).

The standard product vs. ASIC/COT cut is independent of the market served, and should be broken out in each segment.

Some of us can pick apart individual segments. One I see is 2x or more off from what can be counted based on units shipped.
rswitch 12/5/2012 | 1:32:43 AM
re: Ethernet Rules Switch Fabric Market I wonder which system vendors will buy that many merchant switch fabrics. Cisco, Juniper, Foundry, Procket (sorry! I meant Cisco a second time) are all using their own ASICs. So who's left?

rswitch 12/5/2012 | 1:32:44 AM
re: Ethernet Rules Switch Fabric Market I wonder which system vendors will buy that many merchant switch fabrics. Cisco, Juniper, Foundry, Procket (sorry! I meant Cisco a second time) are all using their own ASICs. So who's left?

rswitch 12/5/2012 | 1:32:44 AM
re: Ethernet Rules Switch Fabric Market I wonder which system vendors will but that many merchant switch fabrics. Cisco, Juniper, Foundry, Procket (sorry! I meant Cisco a second time) are all using their own ASICs. So who's left?

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