10G, 40G Ethernet to grow at rapid clip despite economy, study says

Enterprise ports of 10Gbps "going through the roof"

A troubled economy won't be enough to sink increased enterprise demand for high-bandwidth Ethernet services, says a new report from Infonetics Research.

The study says that revenues for 10Gbps Ethernet services and equipment worldwide will hit nearly $9.5 billion by the end of 2008 (up 30% from $7.3 billion last year), and that demand for 40Gbps Ethernet services will grow rapidly over the next four years. Between 2007 and 2011, the study projects that 40G Ethernet revenue will see a compound annual growth rate (CAGR) of 59% as companies look to meet ever-higher demands for greater bandwidth capacity.

"A majority of service providers we've spoken to are expecting to invest in 40G until the 100G market is up and running," says Michael Howard, a co-founder and principal analyst at Infonetics. "Some providers are hoping to skip the 40G phase altogether, but we don't see that being a viable option, as growing traffic demands are outstripping current capacities and 100G won't reach reasonable price points until about 2012 or 2013."

Overall, the total number of enterprise and ISP equipment ports that ship with capabilities of 10Gbps or higher will increase by more than sevenfold between 2007 and 2011, while revenue for 10G, 40G and 100G services will total roughly $20 billion by 2011, the report says.

"Increasing network capacity was named by network managers as their number one initiative," says Infonetics analyst Matthias Machowinski. "It's no surprise then that shipments of 10G ports are going through the roof. Ethernet switch-based 10G port shipments, for example, grew 140% in 2007."

Howard says that 100G services will really start to take off in 2013, although he expects them to debut on a limited basis sometime in 2009. Once 100G Ethernet does hit the market, though, Howard expects that it will meet demand for enterprise bandwidth for at least the next decade and will solve traffic problems "for a very long time." Late least year, Verizon became the first telecom carrier to test a native 100Gbps network. The company has also said that it plans to start deploying a 100Gbps network over its major routes at the start of 2009.

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