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Good News, Bad News for Enterprise Networking Industry
November 15, 2002
By Kevin Reichard

The enterprise networking is facing both good and bad times as we head into the end of 2003, according to market-research firm Dell'Oro Group, with Gigabit Ethernet port shipments growing and SONET/SDH shipments declining.

Gigabit Ethernet port shipments grew 12 percent during 3Q02, according to a report issued by Dell'Oro Group, although revenues -- while increasing -- lagged behind thise level of growthm thanks to a shift toward less expensive copper ports. Still, the port shipment experienced a fourth consecutive quarter of double-digit sequential growth.

In addition, shipments for 10-Gigabit Ethernet (the follow-on technology to Gigabit Ethernet), grew 78 percent during the third quarter, as more vendors entered the field. However, 10-Gigabit Ethernet represents a small portion of the total Gigabit Ethernet market.

Leading vendors in the Gigabit Ethernet space are (in order) Cisco (Quote), 3Com (Quote), Nortel (Quote), Extreme Networks (Quote), Foundry Networks (Quote), and Hewlett-Packard (Quote).

Meanwhile, the SONET/SDH Market was $1.1 billion in the third quarter of 2002, representing 67percent of the total optical transport market. And while SONET/SDH revenues declined compared to previous quarters, it grew its share of the total optical transport market as fewer deployments of DWDM have been realized, according to Jimmy Yu, an analyst at Dell'Oro Group. Leading vendors in this space (in order) are Lucent (Quote), Siemens (Quote), and Nortel (Quote).

Also declining were combined worldwide sales of DSL Access Concentrator and Customer Premises Equipment (CPE), falling 19 percent in the third quarter of 2002 when compared to the third quarter of 2001. Shipment volumes declined in all major regions of the world -- North America, Europe, and Asia. Leading vendors in this space (in order) are Alcatel (Quote), Siemens (Quote), Thomson (Quote), Cisco (Quote), and NEC (Quote).

Rounding out the bad news in the quarter was Dell'Oro's estimation that worldwide router sales declined slightly when compared to a year ago. Accorind to Dell'Oro analysts, demand for high-end routers fell by 7 percent as telecommunications and Internet service providers continued to scale back capital expenditures. However, small and medium-sized businesses slightly stepped up their expenditures of low-end and midrange routers, as that market grew 1 percent in the third quarter. The leading vendors in this space (in order) are Cisco (Quote) and Juniper (Quote).

Kevin Reichard is executive editor of OpticallyNetworked.

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