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Report: Ethernet switch revenue down 19 percent

By Sean Michael Kerner on August 5, 2009 3:45 PM

From the 'economic slowdown stats' files:

Research firm Dell 'Oro Group put out a report this week on the Worldwide Shared Hub, Ethernet & LAN Switch market. The report shows the damage that the current economy has done to the switch market.

For 2009, Dell 'Oro is forecasting global Ethernet switch revenues of $15.8 billion which is a 19 percent decline over the $19.5 billion reported for 2008.

Moving forward the forecast is for 1 percent growth in 2009 for market revenues of $16.0 billion. By 2013 the current forecast model has global Ethernet & LAN Switch market at $18.3 billion.

To my naked eye that means over the next five years, the Ethernet switch market will not recover to 2008 levels of revenue. Frankly, I find that shocking.

I queried Dell'Oro about the report (they graciously sent me the numbers but didn't have time to answer my questions). I also tried to get the opinions of the major switch vendors, but they were also quiet.

Cisco told me they couldn't comment because it's their quiet period (earnings are today). Juniper said they'd comment (but as of 4 PM ET they still haven't after more than 24 hours of trying..).

HP ProCurve didn't answer my questions, but they did indirectly confirm the accuracy of the report.

When it comes to forecasts and predictions, we (publicly) leave that to analysts - and since we report revenue directly to Dell'Oro, we feel their reports are as accurate as any in the industry," an HP ProCurve spokesperson told me. "Also, since ProCurve is a business unit of HP, we don't provide revenue info or market share publicly."

Though Dell 'Oro's analysts were not available to comment to me directly, they did have a statement in their formal press release that gives some direction on the future outlook for the Ethernet switch market.

"Given the severity of the decline during the first quarter of 2009, it will be difficult for the market to rebound quickly to the revenue and port levels we saw in 2008,"said Alan Weckel, Director of Ethernet Switch Market Research at Dell'Oro Group in a statement. "We believe that the data center will be one of the largest drivers for growth beyond 2009, as the market is expected to begin expanding again in 2010. However, it will be difficult for the market to return to the robust growth rates it enjoyed over the past 5 years."

Other sectors of networking have seen similar declines. A recent Infonetics report forecast that 2009 would be a down year for networking/telecom gear and that 2010 would see a modest improvement.

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