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L2-L3 Ethernet Switch Market Growth Expected
Mar 2004
SAN JOSE, Calif., March 9 -- Demand for 1G fixed configuration and 1G and 10G chassis switches was strong in 4Q03, but not strong enough to keep worldwide revenue for layer 2-3 Ethernet switches from dipping 1 percent from the third to the fourth quarter, according to Infonetics Research. The market forcast company said the decline was due to sagging sales of 100M fixed and chassis switches.

According to Infonetics Research, worldwide L2-L3 Ethernet switch revenue topped $11.6 billion in 2003 and is projected to grow to $14.2 billion in 2007, despite flat revenue numbers this quarter. Vendors report that end users are starting to increase their spending on network infrastructure at modest levels, which will drive 28 percent port and 11 percent revenue growth in 2004.

"The big story this quarter is how dramatically Cisco reclaimed the lead in the 10G chassis segment by creating a higher density blade and slashing the price per port," said Infonetics Research's Neil Osipuk, lead analyst of the L2-L3 Ethernet Switches report.

"After experiencing two quarters of revenue and port market share decline and losing the lead in the 10G chassis segment to Foundry, Cisco increased its revenue market share from 39 percent in the third quarter of 2003 to 50 percent in the fourth quarter, and their port market share from 40 to 77 percent. A diversified company like Cisco can afford to make lower margins in emerging areas like 10G, so the battle is really just beginning for the more specialized companies like Foundry. But regardless of who takes top position in this market, lower prices will certainly help boost adoption for 10G technology."

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