Big Quarter for IP Router Vendors Cisco, Juniper, Huawei, Fujitsu, Foundry, NEC

(Business News & Technology News, 8 Sep 2008)

Worldwide sales of service provider IP core and edge routers continue at a fast clip, according to market research firm Infonetics Research, with manufacturer revenue up 17 percent quarter-over-quarter in 2Q08 and 40 percent year- over-year from 2Q07.

Infonetics' quarterly report "Service Provider Routers and Switches" shows Cisco posted a 15 percent gain in combined IP edge and core router revenue, giving them over half the worldwide market, a position they've maintained since 2005, despite growing competition. The biggest gain of the quarter was made by Fujitsu, who jumped from the #9 position to #6 worldwide. Huawei, Foundry, and NEC all posted strong double-digit gains in 2Q08, and Juniper and Alcatel-Lucent, the perennial #2 and #3 players (respectively) in the IP router market, each posted respectable single-digit revenue gains.

"Since the upturn in 2003 from the great telecom downturn, IP router revenue has grown 20 percent to over 30 percent each year, and we expect the trend to continue in 2008. The two big drivers for continued growth are expanding traffic and IP transformation projects, with traffic the stronger factor. Of course, spending has to slow or level out at some point, and it will. Cisco, Juniper, Alcatel-Lucent, Huawei, and others hope not, but the overriding damper is that telecom capex growth is slowing (with exceptions in India and China), with indications that capital intensity (the ratio of capital expenditures to revenue) is moving downward, coupled with slow, single-digit revenue growth for many carriers," says Michael Howard, principal analyst and co-founder of Infonetics.

Other highlights from the report:
- Worldwide service provider core and edge IP router revenue hit $2.6 billion in 2Q08
- Revenue from carrier Ethernet switches (CES) grew just 3 percent from 1Q08 to 2Q08
- ATM multiservice switch revenue jumped a surprising 12 percent in 2Q08, driven by mobile backhaul investments, but are down 12 percent year-over-year

Click here for more information on Infonetics Research