Router market dips 6 percent in Q2

Worldwide router sales in the second quarter declined 6 percent sequentially to US$1.5 billion, according to the latest figures from Dell'Oro Group'Inc. Declines in higher-end routers -- those greater than or equal to 1G bit/sec -- offset gains in the lower-end.

The low-end router segment -- those less than or equal to 900M bit/sec and supporting WAN connection speeds up to T1/E1 -- was the only segment with increasing sales in total and for all vendors, according to Dell'Oro. At the very high end, unit shipments were level; however, sales declined as a result of users shifting away from expensive high-speed ports -- OC-192/STM-64 and OC-48/STM-16 -- to low-speed ports: OC-3/STM-1 and Ethernet.

The leader continues to be Cisco Systems Inc., which saw its revenue decline 6 percent from the first quarter, to $1.32 billion. But Cisco appears to have gained more than 2 percent share from the 85.5 percent it had in that quarter.

No. 2 Juniper Networks Inc.'s sales dipped 10 percent to $94 million. The company's share remained about flat, dipping only 0.1 percent.

No. 3 Unisphere Networks Inc., which was acquired by Juniper in May, saw its sales dive 22 percent sequentially, according to Dell'Oro.

In edge/aggregation routers specifically, worldwide sales totaled $471.6 million in the second quarter, which is about flat with the first, according to Dell'Oro competitor Infonetics Research.

Cisco's revenue grew 14 percent. The company achieved 67 percent market share in the second quarter, its highest level since 2000, Infonetics found.

Juniper and Unisphere's combined market share is 14 percent, according to Infonetics. For all of 2002, Infonetics expects the edge/aggregation market to total $1.9 billion, a 25 percent increase from 2001.

A major trend emerging in edge/aggregation is the imminent overlap of this class of routers with IP services routers, Infonetics says. Vendors are adding firewalls, IPSec blades, MPLS-based service capabilities, and more QoS functionality to make their edge/aggregation routers service-rich.

This will pit the aggregation devices directly against IP services routers, which until now owned the firewall, VPN tunneling and MPLS/QoS domain, Infonetics says.

"As these products develop into the same breed, competition will get fierce, and not all products -- or companies -- will survive the battle," says Infonetics Analyst Kevin Mitchell.

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