Remote access servers, routers among winners

Electronic News, Dec 15, 1997 by Carolyn Whelan

Scottsdale, Ariz.--The remote access server (RAS) market grew 28 percent while router sales grew by 7 percent over the first three quarters of 1996, according to a recent In-Stat report.

Other notable findings in In-Stat's "Q3 Networking Quarterlies Results for Routers and Remote Access Servers (RAS)" include 43 percent growth for port shipments, flat shipments for routers in 1Q and 2Q97, followed by rallying in 3Q, and a lull in the RAS market in 3Q97, dropping 6 million while sales dipped 7 percent. That lull, largely due to lower sales of access concentrators, should end as access concentrator market growth picks up, In-Stat said, driven by large organizations building remote access infrastructures and service providers building their infrastructure to meet consumer and business demand for Internet services.

In the 3Q97 access concentrator market, 3Com/U.S. Robotics ranked no. 1, Cisco Systems gained share quarter-to-quarter and Ascend Communications continued to lose market share quarter-to-quarter. The router market experienced flat quarterly revenues of about $1.5 billion for the prior five quarters, with Q3 slightly less at $1.47 billion. Unit shipments initially softened, with a decrease in Q1, a slight increase in Q297 but a 7 percent Q3 unit shipment jump quarter-to-quarter. Unit growth was 26 percent and sales growth 7 percent over the same period last year. In-Stat believes both a slowdown from prior hyper growth and demand for low-end routers are affecting the router market, while anticipation surrounds a new breed of routers (Layer 3 Switches) that will hit the market in Q1 and Q2 of 1998.

Other In-Stat research into LAN switches and hubs found that the LAN hub and switch market grew 7 percent sequentially in 3Q97 over 2Q97, to $2.63 billion in revenue, while growth from 3Q96 to 3Q97 was substantial, at 29 percent. According to "Q3 1997 Hub & Switch Market Analysis," the LAN packet switch market grew 11 percent over 2Q97 to $1.67 billion, increasing its portion of the total to 64 percent, while shared-media hubs end-use sales increased 1 percent to $958 million, for the same period, and switch shipments grew 29 percent sequentially in Q3. Eighty-five percent of switch ports were fixed-configured, while 56 percent of sales were high-end modular switches. Overall average selling prices (ASPs) dropped 15 percent for the quarter to $275 per port. Of the 6 million ports shipped during Q3, 69 percent were Ethernet and 30 percent were Fast Ethernet.

The shared-media hub market maintained steady growth at 11 percent in Q3 to 17.7 million ports, with port growth over 3Q96 a healthy 31 percent. Ethernet hub ports grew 10 percent, while Fast Ethernet grew 51 percent, and for the first time, Fast Ethernet ASPs dropped below $100 per port, to $94.

Another third-quarter report from the Dell'Oro Group on the shared hub and LAN switch market found that sales of shared hubs and LAN switches grew 9 percent over the second quarter, to $2.4 billion. The report cited port shipments growth of 12 percent, to 26 million ports, during the second quarter. Cisco led with 27 percent growth for a total of $605 million in revenue, followed by FORE Systems (19 percent growth for $60 million in revenues), Xylan (18 percent growth for $53 million in revenues) and Bay Networks (15 percent growth for $386 million in revenue). Cabletron Systems, Digital Equipment, IBM and Madge Networks all had negative growth. During the third quarter, sales of 100Mps Ethernet switches increased roughly $200 million sequentially, and comprised the bulk of growth for the shared hub and LAN switch market.