Recession Takes its Toll on Enterprise Routers

Communications market researcher, Infonetics has predicted slow growth for both enterprise routers and the WAN optimization market over the next couple of years, saying the global economic slowdown had already started to take its toll on the telecommunication market. 

 

According to its latest research report, worldwide sales of enterprise routers hit $1.08 billion in the third quarter of the current fiscal year, down one percent from the previous quarter, while sales of WAN optimization appliances are up one percent. 

 

The sale of these products will continue to go down until the end of 2010, says Infonetics in its report, “Enterprise Routers and WAN Optimization Appliances.”

 

This is a bad news for Cisco (News - Alert), which controls nearly 85 percent of the worldwide market for enterprise routers. 

 

In the WAN market, Blue Coat has emerged as the top provider with its purchase of Packeteer, followed by Cisco and Riverbed. 

 

Despite the growing economic storm, according to Infonetics, WAN optimization market may grow a healthy 30 per cent in 2008 from 2007. 

 

"We have been expecting WAN optimization market growth to slow a bit, as is natural for fast growing early markets, but the global economic crisis is exacerbating the slowdown. Quarterly year-over-year revenue growth has been steadily shrinking, and the fourth quarter outlook provided by Blue Coat (News - Alert) and Riverbed is mixed,” said Matthias Machowinski, directing analyst for enterprise voice and data at Infonetics Research. 

 

Yet, Matthias adds, the WAN optimization market may pass the $1 billion mark this year. The pace of growth, however, will certainly slower than previously predicted. 

For the enterprise routers, the growth will get kick-started from the year 2011. 

 

In the last quarter, according to the report, 39 per cent of growth came from North America and 33 per cent from EMEA. 

 

Cisco led the worldwide enterprise router market with 85 per cent of worldwide revenue in third quarter, while Juniper Huawei (News - Alert) took second and third position respectively. 

As part of preparing the report, Infonetics said it tracked the quarterly financial reports of major players in the market such as Allot, Blue Coat, Cisco, Huawei, Ipanema (News - Alert), Juniper, Nortel and others.