Virtualisation, Cloud And Voice Drive Ethernet Growth

The Ethernet switch and router markets saw strong growth in the first quarter, driven by demand for such applications as voice and video-over IP, virtualisation and cloud computing, according to research firm IDC.

The big winner in the surge was Cisco Systems, which saw the largest gains and highest market share in the Ethernet switch space and outperformed the market for service provider Ethernet routers, according to numbers released by the firm yesterday.

In addition, revenues for the fast-growing 10 Gigabit Ethernet switch market topped $1 billion for the first time, hitting $1.15 billion (£798 million) for the quarter.

“The first quarter was an exceptionally good quarter for the Ethernet switch market,” IDC analyst Rohit Mehra said in a statement. “Typically, first calendar quarters tend to be seasonally weak, but 1Q10 was quite different.”

Other drivers fuelling the growth in Ethernet switch sales include network-based businesses and applications and network-attached devices. It also appears that the worldwide recession that hobbled the IT industry is subsiding, Mehra said.

First-quarter global revenues in the Ethernet switch space grew 35.3 percent over the same period last year and the Ethernet router market jumped 15.1 percent.

The router numbers were particularly telling, given that the market had seen four consecutive quarters of year-over-year declines previously.

The enterprise router market continues to be soft, said the analyst, remaining flat both quarter-on-quarter and year-on-year, and off by about 25 percent from the record numbers of 2007 and 2008.

However, service providers saw healthy router growth of 21.9 percent, with multi-service edge routers growing fastest, at 38.6 percent. Service providers account for 72.7 percent of the overall router market, according to the research.

Cisco saw its market share in Ethernet switches climb to 68.5 percent, an increase over the 64.5 percent in the same period last year. In addition, Cisco now owns 52.9 percent of the service provider Ethernet router space, up from 45.6 percent in the first quarter of 2009.

Cisco in March rolled out new fixed Ethernet access switches and unveiled improvements to its routers as part of the company’s larger Borderless Network strategy.

At the time of the announcement, Robert Soderbery, senior vice president and general manager of Cisco’s Ethernet Switching Technology Group, said the strategy, which calls for enabling users to access networks from anywhere with any device at any time, needed an improved network infrastructure.

“It’s moving from a device-centric view of the world to a user-centric view of the world,” Soderbery said in an interview in March.

IDC’s numbers show that networking is continuing to be a key player in the data centre, according to IDC analyst Cindy Borovick.

“The breadth of the network market recovery is very encouraging, with all regions and market segments making a contribution,” Borovick said in a statement. “Of all enterprise IT priorities, networking clearly remains a key building block, playing an important role in the next-generation IT infrastructure.”