VoIP to boost sluggish router market

By Amy Storer, News Writer 08 Feb 2005 | SearchNetworking

Digg This!     StumbleUpon     Del.icio.us

High-tech market research firm In-Stat/MDR forecasts slow growth for the enterprise router market as it extends the cusp of maturity. However, one analyst said the migration to VoIP will spur significant growth and defibrillate the sluggish market.

According to the new report "SOHO and Enterprise Router Market Update," the branch office router market has many equipment vendors, but Cisco Systems Inc. dominates with 89% U.S. market share. Other vendors include Adtran Inc. with 1.4% and Nortel Networks Ltd. with 1%.

In the large U.S. enterprise router market, Cisco dominates with 95% market share and Nortel has 1.1%.

Keith Nissen, senior analyst with Scottsdale, Ariz.-based InStat/MDR, said Cisco's current domination of the enterprise market looks similar to IBM's reign in the 1970s and 1980s. Nissen also commented on the irony of competition thresholds in this market versus the consumer telephony market.

"State regulatory agencies believe the consumer telephony market with 70% to 80% share controlled by the [regional bell operating companies] is not yet competitive and deserves continued heavy regulation to bolster weaker [competitive local exchange carriers]," Nissen said. "Cisco has 95% of the enterprise router market and yet it is considered a competitive market."

Nissen said in the fourth quarter of last year, the firm began receiving data from Chinese companies that were not reporting previously, which means Cisco's global market share may be around 65% for 2004.

Competitors such as Huawei Technologies, ZTE Corp. and other Chinese- and Taiwan-based companies are not yet focused on enterprise markets outside Asia, but are successfully taking market share from Nortel, Lucent Technologies and others in Asian and European carrier markets, according to Nissen.

Nissen expects these companies to target the global enterprise market and offer a much cheaper alternative to Cisco within the next few years.

The report claims the high-end enterprise router market is a mature market, as few new large enterprises are created each year. Nissen said equipment replacement cycles and the need for improved security are driving the markets.

Nissen indicated another trend toward distributed network architectures in which enterprises deploy fewer large routers and firewalls at the network edge and install smaller secure routers for individual workgroups and departments, allowing for more flexibility in data routing and security policies.

For more information Learn more about VoIP security   Read our exclusive on Cisco's 2005 priorities

The report logged branch office routers growth at 8% in 2003, but is expected to decline for 2004.

Nissen said the firm forecasts branch office router shipments to remain flat over the next five years because companies are deploying multi-service gateway devices, rather than standard routers at the branch office.

In-Stat refers to these devices as the "business gateway," and predicts they will be an office-in-a-box type of product. Nissen said these multi-service gateways will function as a data router, firewall, IP PBX, Wi-Fi access point and VoIP gateway.

Migration to VoIP will trigger the conversion of branch offices, and small to medium-sized enterprises (SME) to these business gateway devices, according to Nissen.

It remains to be seen who will supply these business gateway devices. Large corporate branch offices can buy from value added resellers or distributors and will manage the device remotely, but there remains a large SME market containing companies without large IT departments.

Tags: Network Hardware,  Network Administration,  VIEW ALL TAGS

Digg This!     StumbleUpon     Del.icio.us

RELATED CONTENT Network Hardware Q&A: Nortel's data networking chief discusses the future Nortel routers and switches may go to buyer of telephony business 3Com hopes to win enterprise networking customers with global H3C push Extreme's port extender can replace consumer devices at network edge Cisco unveils Unified Computing, merging servers, storage and networks Network change and configuration management vendors see big changes Scalable network lifecycle management processes can reduce costs Physical network security key to fighting low-tech threats Cisco expands Nexus data center switch line with eye on virtualization HP ProCurve unveils data center network strategy Network Hardware Research Network Administration How server virtualization improves efficiency in a client-server model Understand Windows tracert output to troubleshoot network connectivity Why would a computer show drive letters for discs that don't exist? Using tracert and TTL to troubleshoot network connectivity problems Open source software for enterprise network management and monitoring When do applications suffer from poor network performance? Tight times? Organize your networking group to stay above the stress Managing Network Problem Users: The make-it-so CEO Checking IP configuration to troubleshoot Windows network connectivity Bandwidth allocation: How can I give a download limit for each user? Network Administration Research

RELATED GLOSSARY TERMS Terms from Whatis.com − the technology online dictionary core router  (SearchNetworking.com) fiber jumper  (SearchNetworking.com) flow routing  (SearchNetworking.com) foreign agent  (SearchNetworking.com) foreign network  (SearchNetworking.com) hardware load-balancing device  (SearchNetworking.com) logical router  (SearchNetworking.com) mrouter  (SearchNetworking.com) patch cord  (SearchNetworking.com) port interface card (PIC)  (SearchNetworking.com)

RELATED RESOURCES 2020software.com, trial software downloads for accounting software, ERP software, CRM software and business software systems Search Bitpipe.com for the latest white papers and business webcasts Whatis.com, the online computer dictionary