A New Report by RHK Shows the IP Edge Devices Market Will Reach $33 Billion in Size by 2004 — Surpassing the Multiservice Switch Market in Sales

Business Wire, Feb 12, 2001

Business Editors/High-Tech Writers

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SOUTH SAN FRANCISCO, Calif.--(BUSINESS WIRE)--Feb 12, 2001

A recent report by leading telecom market research firm RHK Inc. indicates that the North American network edge switching and routing market reached $7.6 billion in 2000, and is expected grow at a CAGR of 44% to $33 billion by 2004.

The report, "Edge Switching & Routing: Market Forecast and Analysis," shows that IP-centric network edge equipment will account for almost 60% of equipment vendor revenues by 2004 vs. some 37% in 2000. This growth is expected to come at the expense of current ATM and Frame Relay network edge offerings as global networks move to a greater degree of IP-centricity.

One segment of the IP edge device sector that RHK expects to achieve significant growth is the market for service creation devices, which enable service providers to offer IP-based value-added network services. This sub-market alone is expected to grow at a projected CAGR of over 90% during the 2000-2004 forecast period.

"We believe service creation devices offer service providers the ability to improve their bottom-lines through the creation of valued-added, differentiated services -- thus making this segment a potentially explosive component of the edge market," observes Bob Larribeau, Director of Edge Switching & Routing at RHK. "As a result, we expect IP-based systems to be increasingly pervasive as providers better exploit services that expand the revenue-generating abilities of IP networks." The report shows that while the market for multiservice products, including ATM and Frame Relay switches, is expected to grow at a CAGR of 29% from $4.7 billion in 2000 to $13 billion in 2004, this growth rate has been, and will continue to be, impacted by the increasing dominance of IP in service provider networks.

"ATM is far from dead," remarks RHK's Edge Switching & Routing Analyst, Rosalyn Roseboro. "Many service providers are building out their IP networks, and realistically still depend on some ATM and Frame Relay access technologies to support their existing customer base. While the world is migrating to IP,

our numbers indicate that multiservice products will remain a significant but lower growth market. ATM continues to have quality of service advantages over IP, so we expect to see some carriers opt for a degree of ATM depth in their networks for the near to intermediate term."

RHK's "Edge Switching & Routing: Market Forecast and Analysis" report, published in January 2001, is part of RHK's Edge Switching & Routing Service, which explores the technologies and market forces and emerging factors that drive the network edge market For more information about this service, please contact Mike Mahan, VP Sales at 650/737-9600 or Mike_Mahan@rhk.com.

Definitions:

RHK defines the IP edge equipment market as devices that reside at the edge of the service provider network, taking traffic to/from the access segment and feeding it to/from the network core. These devices include aggregation routers, session management devices, and service creation devices.

IP aggregation routers        Aggregate IP traffic coming in from the
                              access network

Session management devices    Support the management of DSL subscriber
                              sessions

Service creation devices      Enable service providers to offer
                              value-added network-based services

Multiservice switches         Support ATM and Frame Relay data
                              services

RHK Inc. is a leading global industry market research and consulting firm specializing in the analysis of advanced technologies for the public telecommunications network. The company provides subscription services and custom consulting to technology vendors, service providers, and the investment community in North America, Europe, and the Asia-Pacific region. RHK's areas of expertise include: Access Networks, Core and Edge Switching & Routing, Emerging Network Architectures, New Voice Infrastructure, Optical Components, Telecom OS, SONET/SDH, WDM & Optical Networks, and other emerging technologies. RHK is based in South San Francisco, CA. For more information, visit the company's Web site at www.rhk.com.

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