* Goldman Sachs LAN survey results
Goldman Sachs recently released survey results that back up what Dell’Oro Group had been saying earlier this year: we’re going to see a surge in LAN equipment buying in 2005.
Goldman Sachs talked to 100 network managers at Fortune 1000 companies, so bear in mind that its perspective is skewed to large enterprise firms. The survey found that 67% of respondents plan to upgrade 11% or more of their Ethernet networks this year. Most are looking to upgrade between 20% and 40% of those networks.
The main reason? The end of the line for some aging technologies. With corporate spending held in check in recent years, the network technologies in place haven’t been updated, and it’s just time. Average lifecycle, according to Goldman Sachs, is four years.
Probably because the companies surveyed are large, they favor modular switches. Sixty percent of respondents prefer that category over, say, stackables. Goldman Sachs notes that modular switches engender stronger brand loyalty and enjoy higher margins than other kinds of switches.
Half of Ethernet ports sold this year will result from upgrades, rather than “organic growth,” the financial firm says.
After “end of life,” the major reasons cited for buying new equipment were capacity and new features.
The new features might be VoIP, wireless LANs or power over Ethernet, but security is the main concern, the survey shows. Half of the respondents upgrading to get new features are doing so out of security concerns.
On the capacity side, 47% of those upgrading modular switches are doing so primarily to move to Gigabit Ethernet.
While Goldman Sachs stressed the benefits of these trends for market leader Cisco, other vendors are bound to benefit as well. It will be interesting to see which vendors are able to capitalize on this expected spending surge.
