Networking market to grow 15.5% in 1999 - Industry Trend or Event

Communications News, June, 1999

The networking equipment market grew 17.7% in 1998 over 1997 and is expected to grow 15.5% in 1999, according to a recent research report by Cahners In-Stat Group. The rate of growth for networking equipment will slow slightly in 1999 due to softening demand in Q3 and Q4 caused by the purchasing freezes of Y2K-wary enterprises. However, Cahners In-Stat Group expects the overall impact of Y2K on the networking equipment market to be minor, resulting in slightly negative growth of 1.8% in Q4 1999.

The new report also found that North America continues to drive networking revenues with $16.5 billion in 1998. The top three vendors, Cisco, 3Com, and Nortel Networks, represented 50% of revenues in 1998. Cisco ranks number one in revenues with 29.2% market share, an increase of 2% over 1997. Revenues in 1999 will be driven by LAN switching, access concentrators, and ATM WAN switching.

The emergence of traditional voice-equipment vendors and the frenzy of acquisition activity that began in 1998 will change the playing field this year and into 2000. As service providers, both traditional and nontraditional, continue to build multiservice IPinfrastructure, vendors with both the expertise and the channel to these high dollar customers will emerge winners. The report, State of the Networking Equipment Market 1999, #WN9902MS, includes worldwide market shares for 1998 and network equipment sales forecast for 1999.