Cisco, Juniper, HP drive Ethernet switch market in Q4

Ethernet switch market grew 20% sequentially; Cisco share loss accelerated in 2009

The Ethernet switch market grew almost 20% sequentially during the fourth quarter, with Cisco, HP and Juniper Networks adding almost $600 million in incremental revenues, according to a recent study by Dell'Oro Group. The research firm earlier had forecasted a 25% sequential increase.Cisco's share actually declined for the full year, however, and at a quicker pace than the 1% drop in 2008, according to separate research from investment firm UBS.

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Year-end budget spending and supply constraints from the previous quarter helped propel market growth in the fourth quarter, according to Dell'Oro's Alan Weckel, director of Ethernet switch research. The worldwide market in Q3 was $4 billion and Dell'Oro had forecast it to be $4.2 billion in Q4, an increase of 5%.

Dell'Oro expects the market to continue to expand in 2010 due to the growth of 10G Ethernet as a server connectivity and aggregation application in data centers. Dell'Oro found that 10G Ethernet was the only segment of the Ethernet switch market to show sequential port and revenue growth in Q4, due to strong shipments of fixed 10G Ethernet switches for data centers.

The worldwide market for 10G Ethernet switches was $737 million in Q3 and Dell'Oro forecast it to grow to $908 million in Q4, an increase of 23%. The majority of revenue growth in Ethernet switching this year is also expected to come from 10G switches, Dell'Oro notes.

Cisco's Ethernet switching share losses accelerated in 2009, according to UBS. In 2007, Cisco had a 72% share of the market, which dipped to 71% in 2008 and then dropped to 67% in 2009, the firm found.

"We believe the acceleration in 2009 was likely due to the recession, where pricing was a more meaningful factor with tighter IT budgets," wrote UBS analyst Nikos Theodosopoulos in a bulletin on Q4 and year-end networking share trends.

Overall share gainers in 2009 include HP, 3Com, Juniper and Brocade in the Layer 2 and 3 markets, UBS notes. Both F5 Networks and Citrix gained in the Layer 4 - 7 segment.

Cisco is still the clear leader in total switch share but is managing the transition from its Catalyst line to the new Nexus platform and "working to capture the next switching transition," UBS notes.

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