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Core router market: no growth until 2004

The market for large service-provider core routers may have bottomed out but it is unlikely to see growth until 2004, a network market researcher said yesterday.

Worldwide sales of routers with capacities greater than 10Gbps have probably reached the end of a steep decline but will not recover next year, as the telecommunications industry reels from bankruptcies and tight budgets, said Tam Dell'Oro, founder of Dell'Oro Group.

Sales revenue from all routers will grow just 1% in 2003, to $6.9bn (£4.5bn) from $6.8bn in 2002, according to a survey released by the group.

By 2006, the market will have grown to $8.2bn. That market excludes digital subscriber line (DSL) routers for end customers but includes a wide range of products, from small office-home office (SOHO) routers to the big carrier core devices.

The bubble in network investment that occurred in the late 1990s, along with carriers' tighter budgets, is likely to make product replacement cycles for service-provider routers longer in the coming years, Dell'Oro said.

Rather than being replaced over a period of about four years, as was typical in the past, the routers in place in 2001 will probably not all be replaced with new equipment until 2008.

For several years yet, many carriers will be in maintenance mode, just maintaining or incrementally improving their existing routers as needed, Dell'Oro said.

Cisco Systems will maintain its dominance over the industry, according to Dell'Oro. It holds market share of about 80% in routers of 1Gbps to 9Gbps and about 70% in routers of 10Gbps and higher capacity.

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