21 November 2003 Boston, MA Lightwave -- Service providers worldwide are increasing their spending on routers and switches, fueled once again by the strong router segment, according to Infonetics Research's quarterly worldwide market share and forecast service, Service Provider Routers and Switches.
Worldwide revenue for service-provider routers and switches totaled $1.23 billion in the third quarter, up 13% from the second quarter. All router and switch categories grew and are projected to grow again in the fourth quarter, increasing 16% quarter over quarter, as the year-end budget flush makes the second half of 2003 very positive for many vendors. Routers showed the most growth this quarter, with revenue increases in the double-digit percentages in all categories.
"As we expected, carriers are spending more on routers and switches in the second half of the year. This growth is especially noteworthy because most vendors saw revenue growth in the third calendar quarter, which typically exhibits a seasonal decline," said Infonetics Research's Kevin Mitchell, lead analyst of the report.
"We just finished a study on service-provider plans for MPLS, IP, and ATM, and the results support the router increases we're tracking on the vendor side," Mitchell continued. "Despite a lean capex environment, service providers are increasing their investments in IP and MPLS so they can open up new revenue opportunities and save on opex and capex."
Despite a positive second half of the year, the total service provider router and switch market is projected to decline 8% in 2003 compared to 2002, but growth will return in 2004 for all segments.
Third-quarter market highlights include:
- Core routers were the biggest gainer, growing 18% to $351.4 million.
- Cisco had a strong quarter; their core router revenue increased 21%, and their worldwide revenue market share increased to 72% from 70%.
- Juniper's revenue market share remained stable at 20% even as their core router revenue grew 15%.
- North America remains the largest market for service-provider routers and switches with 41% of total revenue, followed by EMEA with 31%, Asia Pacific with 25%, and Central America/Latin America with 3%.