Global Recession Stings Carrier Ethernet Switch/Router Market

Worldwide sales of carrier Ethernet switch/ routers (CESRs) fell 23 percent quarter-over-quarter and 27 percent year-over-year in the first quarter of 2009 to $423 million, according to the Carrier Ethernet Switch/ Router Quarterly Market Tracker service published by Heavy Reading, the market research division of TechWeb’s Light Reading.

Heavy Reading now projects the global CESR market to decline by more than 20 percent to $1.75 billion in 2009 but return to growth as the economy begins to stabilise. Heavy Reading estimates the CESR market has a good chance to reach $2.74 billion by 2013.

“Carrier Ethernet remains the technology of choice for building converged telecommunications network solutions because of its extraordinary performance-price advantages, but the maturing market is not immune to economic woes that have affected every region,” said Stan Hubbard, senior analyst for Heavy Reading and author of the CESR Quarterly Market Tracker. “The CESR market declined sequentially for the third quarter in a row in 1Q09. The slowdown actually accelerated due to the combined effect of the worsening global recession, intensifying vendor competition, lingering chaos in the credit markets that is forcing network operators to delay upgrades and expansions, and seasonal capital spending trends.”

“Beyond the challenges posed by the dismal global economy, CESR competition has never been more intense - with about 19 vendors battling for their fair share of a pie that has contracted beyond what might have been anticipated just a few quarters ago,” said Hubbard. “Numerous competitors armed with next-generation CESR platforms have been winning new business and trimming share from market leader Cisco.”

Heavy Reading estimates that No 1 Cisco lost 3 market share points in 1Q09. No 2 Alcatel-Lucent and No 3 Huawei each gained half a point to close at 19 percent and nearly 7 percent, respectively. No 4 Extreme gained a full share point in 1Q09 and has recorded consistent share gains on a rolling four-quarter basis over the past 18 months. No 5 ZTE, No 6 Brocade/ Foundry, and No 7 Hitachi Cable were fairly close to one another in terms of market share.