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Carrier Switching and Routing are the largest segments of the data networking equipment industry, and account for the majority of revenues for firms such as Cisco, Juniper, etc. This report provides IEMR's revenue and revenue market share estimates, Average Selling Price (ASP) of Carrier Switching and Routing Equipment, and forecasts for Global and Regional Carrier Switching and Routing Markets. We provide detailed historical revenue metrics for eighteen of the leading switching and routing equipment vendors in the world. For each vendor, we cover a broad range of carrier-class product and services categories, including their Core IP/MPLS, Edge IP/MPLS, IP/Ethernet aggregation, and ATM/MPLS products and services.

Together with historical revenue, market share, and ASP metrics, we provide forecasts at the global and regional level for our 18 coverage firms in the carrier switching and routing market based on IEMR's structural-time series modeling. Clients will receive an Excel file which provides them with extensive charts of revenue and market share metrics for the Top-5 companies in each of the four market segments of the carrier switching and routing market. It also provides key charts depicting market share forecasts, ASP forecasts, and revenue forecasts for various vendors.

Why you should buy this report:

By purchasing this report, you will receive an Excel file with 5 datasheets: 4 regional forecasts and a global forecast. In each datasheet, we cover Product and Services Revenue for the 18 coverage firms in Core IP/MPLS, Edge IP/MPLS, IP/Ethernet Aggregation, and ATM/MPLS. We also provide Units Installed and Average Selling Price for the industry (for each of Core IP/MPLS, Edge IP/MPLS, IP/Ethernet Aggregation, and ATM/MPLS). In addition to the 5 datasheets, the file has 50 charts that illustrate the performance of the Top-5 vendors in Core IP/MPLS, Edge IP/MPLS, IP/Ethernet Aggregation, and ATM/MPLS. You will also receive a PowerPoint presentation which provides insights into the global switching and routing equipment market. These reports provide answers to all of the following questions:

·         What are the key trends in the global switching and routing equipment market? How will this market grow over the next five years?

·         Which region/country has the fastest growing switching and routing equipment market in the world? What are the key trends in each region/country?

·         Which segments of the switching and routing equipment market are growing most rapidly – Core IP networks/MPLS networks, Edge IP networks/MPLS networks, IP/Ethernet Aggregation, or ATM/MPLS? Does the answer differ across regions and countries?

·         What is the total revenue in the global switching and routing equipment market? What about revenues in Core IP/MPLS, Edge IP/MPLS, IP/Ethernet Aggregation, and ATM/MPLS?

·         What is the Average Selling Price of switching and routing equipment? Does Average Selling Price differ across regions?

This report will be useful to:

·         Switching and routing equipment manufacturers

·         Strategists and analysts at companies in all areas of the telecommunications market that need strategy recommendations on key trends in the global switching and routing equipment market

·         Consultants advising their clients on switching and routing markets

·         Financial analysts and portfolio managers covering firms in the switching and routing market

·         Researchers who need to gain a better understanding of the global switching and routing market

To read the Executive Summary of our Global & Regional Carrier Class Switching & Routing Equipment Market Forecast, please click on the link below.

Executive Summary

Global market for Carrier Switching & Routing Equipment to rise to $27.9 billion in 2014, a CAGR of 17.3%

The fundamental long-term market drivers behind the carrier-class routing market remain in place, causing us to maintain our longer term positive forecast for this market. 

• The “Great Recession” took a chunk out of the carrier-class switching and routing equipment market in 2008. Year-over-Year (YoY), total revenues from carrier-class switching and routing equipment and services were down -25.6% in Q2.2009 and came in at $2.72 billion in Q2.2009.
•  Sequentially, however, we saw some stabilization in the market with overall revenues remaining unchanged Quarter-over-Quarter (QoQ). 
•  Our positive view about the longer-term prospects for carrier class switching and routing equipment and services market remains unchanged.
•  Broadband connectivity demand and the move by operators to replace their legacy ATM and Frame Relay networks will continue to drive demand for carrier-class switching and routing equipment and services.  

Our forecast takes into account the scenario that wireless backhaul will be a more immediate concern for carriers during the forecast period

•  Our forecast that the carrier-class switching and routing market will grow at a CAGR of 17.3% over the next five years is based on assumptions of the wireless backhaul opportunity.
•  Wireless operators have traditionally backhauled their voice and data traffic to/from their cell sites to switching centers by leasing T1 or E1 copper lines. With the rapid use of 3G and impending use of 4G and converged devices during the forecast period, carriers face the difficult choice of increasing lease rates on their T1/E1 copper lines or making the move towards ethernet switches that are both lower cost and better able to move data than existing solutions.
•  Our interviews with operators suggest that intelligent edge routing will evolve and replace TDM-based mobile switching centres. We also think that carriers will continue to invest in ethernet switches in order to move away from their (higher) potential investments in T1/E1 lines.
• We think that wireless backhaul provides THE growth opportunity for the carrier switching and routing market and it is going to happen in the next five years. At the same time, we do not think that the current economic downturn will result in reductions in internet traffic growth and believe that growth (and traffic demand) will occur across the board in all regions.

Carrier Edge Switching and Routing Equipment to see the biggest growth, growing at a CAGR of 23.2% over the next five years

Carrier Edge Switching and Routing equipment and services driven by Edge IP/MPLS growth

•  Edge IP/MPLS equipment and service revenue dropped by -18.3% in Q2.2009 (YoY).
•  Edge IP/Ethernet Aggregation equipment and service revenue dropped by -29.0% in Q2.2009 (YoY). Edge IP/MPLS grew +10.3% sequentially (QoQ) in Q2.2009, suggesting to us that the main part of the market will see continued growth for the rest of 2009.
•  We are forecasting Edge IP/MPLS equipment and service revenues to grow at a CAGR of 23.2% over the next five years.
•  We are forecasting Edge IP/Ethernet Aggregation Equipment revenues to remain flat and grow at a CAGR of +0.3% over the next five years.
•   We also think that there is upside in the Edge Switching and Routing Equipment and Services market coming from replacement of legacy cross connects with routers designed to aggregate cellular traffic from base stations.

Carrier Core Switching and Routing Equipment to grow at a CAGR of 17% over the next five years

2009 was a difficult year for Core Routing Equipment with YoY revenues declining by -32.1%

•  Core Switching and Routing Equipment and Service market declined by -32.1% (YoY) in 2Q.2009 with global revenues coming in at $584 million in 2Q.2009.
•  Sequentially, there was stabilization in this market with QoQ growth rate of -2.2% in 2Q.2009.
•  We are forecasting Core IP/MPLS revenues to grow at a CAGR of 17% over the next five years.
•  We think that core switching and routing is a bandwidth and capacity market with changes in market share related largely to upgrade cycles at customers of the major vendors (Cisco, Juniper, Huawei).
•  We also think that as new capacity and infrastructure begin to be laid out in Emerging Asian and African markets, Chinese players like Huawei stand to benefit from their lower cost structure and better traction they have with operators in these markets.

Edge IP/MPLS Equipment ASPs to firm up while other segments will see pricing weakness

We think that as edge IP/MPLS evolves to replace TDM-based mobile switching centres, ASPs in the Edge IP/MPLS segment will firm up

•  Our channel checks with leading service providers and vendors suggest that they expect pricing of Edge IP/MPLS equipment to firm up as equipment productivity and intelligence increases.
•  For this segment, we are expecting a price point increase (per unit sold) of 9.0%. We expect the average selling price for Edge IP/MPLS equipment to rise from an expected $76,800 in 2009 to $118,400 in 2014.
•  While ASPs for IP Ethernet Aggregation Equipment have seen a precipitous decline of -37% CAGR over the last four years, we think that the carnage in this segment will continue. Our forecast is that ASPs in this segment will decline at a CAGR of -9.6% over the next five years.

Regional Overview

Asia-Pacific carrier-class switching and routing market to rise to $11 billion in 2014, a CAGR of 21.9%

The Asia Pacific region will account for 39.4% of the world market share for carrier-class switching and routing equipment spend

•  We see the biggest growth in carrier-class switching and routing equipment coming from the Asia-Pacific Region. Total spend in the region will rise at a CAGR of 21.9% to reach $11.03 billion by 2014.
•  Readers will note that in 2008, spend on carrier-class switching and routing equipment in the Asia Pacific Region was $4.1 billion (accounting for 32.5% of global spending).
•  Pricing of equipment and services has always been competitive in Asia. As with our global scenario, we think that equipment and services pricing will firm up in Asian markets (+5.3% CAGR in the 2009 – 2014 period).
•  However, ASP levels will remain lower in the Asia Pacific Region. The only exception to this scenario are Edge IP/MPLS equipment and services. As carriers in this region adopt a “spend to save” approach to network development, vendors will see some price improvements for their equipment and services.

North America carrier-class switching and routing market to rise to $7.86 billion in 2014, a CAGR of 14.7%

While 2009 will be a tough year for North America, we expect growth to resume in 2010

•  For North America, Q2.2009 saw total spend on carrier-class switching and routing equipment decline by -23.8% YoY, a terrible rate of growth for sure.
•  However, a look at the QoQ number show that total spend in Q2.2009 actually rose from $787 million to $913 million, a sequential increase of 16%. This tells us that demand by carriers continues to be firm.
•  Our forecast for North America is that total carrier-class switching and routing equipment spend will increase from the expected $3.96 billion in 2009 to $7.86 billion in 2014, a CAGR of 14.7%.
•  As in other markets, revenues in the Edge IP/MPLS category will lead the North American market. We are forecasting revenue growth in the Edge IP/MPLS segment of 19.5% CAGR, with revenue in this segment coming in at $5.1 billion in 2014 (up from $2.2 billion in 2008)

EMEA carrier-class switching and routing market to rise to $7.97 billion in 2014, a CAGR of 16.3%

We are expecting EMEA operators to also recover from the fall in spending being experienced in 2009

•  Spending among EMEA carriers dropped even steeper compared to North American carriers. Q2.2009 saw total spend on carrier-class switching and routing equipment decline by -32.9% YoY.
•  Sequential growth rates were also not positive, with total spend in Q2.2009 coming in at $729 million, a sequential decline of -12.9%.
•  Our forecast for EMEA is that total carrier-class switching and routing equipment spend will increase from the expected $3.75 billion in 2009 to $7.97 billion in 2014, a CAGR of 16.3%.
•  The basic trends affecting operators in other regions will also be present in EMEA and the higher growth rates in the region compared to North America is attributable to the presence of emerging markets (like Russia etc.) in this grouping.

Latin America carrier-class switching and routing equipment market to remain slow

Unlike other regions, our forecasting model is predicting a slower growth rate in Latin America compared to other regions

•  Spending among Latin American carriers dropped considerably over the last year. Q2.2009 saw total spend on carrier-class switching and routing equipment decline by -60.4% YoY.
•  Sequential growth rates were also not positive, with total spend in Q2.2009 coming in at $112 million, a sequential decline of -44.6%.
•  Our interviews with operators and vendors on their Latin America prospects have conditioned our forecast for this region.
•  We are forecasting that total carrier-class switching and routing equipment spend will increase from the expected $766 million expected in 2009 to $1.1 billion in 2014, a CAGR of 7.7%.

Company-level Market Share Dynamics and Forecasts

Cisco’s overall market share will continue to erode

Overall market share of Cisco fell to 39.7% in Q2.2009

•  Over the last five years, Cisco has seen a decline in its market share of the carrier-class switching and routing market. We are expecting total revenue for Cisco in this market to come in at about $4.92 billion in 2009, a decline of -17.2% YoY.
•  In Q2.2009, Cisco’s market share of the overall market was 39.7%. We are expecting that for 2009, Cisco’s market share will be 39.1%, which is down from 44.8% in 2005.
•  We continue to expect market share declines for Cisco, primarily because of aggressive pricing and reach by Alcatel-Lucent and Huawei over the forecast period.
•  Also, despite the recent acquisition of Starent by Cisco, we do not think that the combined Cisco + Starent entity would have enough traction which will cause operators to switch from their existing vendors to Starent’s offering in the WCDMA and 4G (WiMax, LTE) markets. 

Cisco’s Core IP/MPLS routing market share to decline to 47.9% by 2011

• Carrier core routing has largely become a bandwidth play with very little product differentiation, in our view. 
•  In Q2.2009, Cisco’s market share of the Core IP/MPLS switching and routing market was 52.9%. We are expecting that for 2009, Cisco’s market share in this segment will come in at 51.7%, which is down almost 1000 bps from its 61.1% market share in this segment only five years ago in 2005.
•  In our view, Juniper Networks is also going to see a decline in its Core IP/MPLS market share over the forecast period. We are expecting Juniper’s market share to decline to 26.7% in 2011 compared to its expected 29.6% market share expected in 2009. 
•  The key dynamic here is growth in Asia and Huawei’s better reach in emerging markets such as China and India. Given commoditization in this market segment, our view is that Huawei’s lower-priced offerings will continue to gain traction. We expect its market share of the Core IP/MPLS market to increase to 12.4% in 2011, up from its 7.9% market share in 2008 in the Core IP/MPLS segment.    

Cisco and Juniper to see increased competition from Alcatel-Lucent and Huawei in Edge Routers

• We continue to believe that both Cisco and Juniper will see longer-term declines in their market shares in the Edge IP/MPLS router space. 
•  Readers should keep in mind that, historically, Cisco’s market share has declined from 47.5% in 2005 to 42.4% in 2008. While Cisco was able to maintain a significant share with its legacy 7600 router through 2007, 2008 saw a decline in its Edge IP/MPLS market share as customers began to buy Juniper’s MX routers. While Cisco’s ASR9000 product does surpass Juniper’s offering, Alcatel-Lucent, Huawei, and others have also come out with multi-service boxes that can compete with Cisco’s offering.
•  In our view, nothing in Cisco’s or Juniper’s latest financials suggest to us that there is a higher customer propensity to buy their latest Edge products. This can be compared to market share gains by Huawei and Alcatel in a down market. 
•  We expect Cisco’s market share of the Edge IP/MPLS router market to decline to 34.7% by 2011 and Juniper’s to decline to to 14.2% in 2011.

Table of Contents

Annual and Quarterly Results for each of the 18 companies and Product and Application Segments available from 1Q.2005 to 2Q.2009

Annual Forecasts for Product and Application Segments available from 2009F to 2014F

Quarterly Forecasts for Product and Application Segments available from 3Q.2009 to 4Q.2011

Annual Forecasts for Top-5 companies in each Product/Application segment available from 2009F to 2014F

Quarterly Forecasts for Top-5 companies in each Product/Application segment available from 3Q.2009 to 4Q.2011

Products and Applications:

  Core IP/MPLS Product and Services Revenue

  Edge IP/MPLS Product and Services Revenue

  IP/Ethernet Aggregation Product and Services Revenue

  ATM/MPLS Product and Services Revenue

  Core IP/MPLS Units Installed

  Edge IP/MPLS Units Installed

  IP/Ethernet Aggregation Units Installed

  ATM/MPLS Units Installed

  Core IP/MPLS Average Selling Price (available for Global and Regional data only)

  Edge IP/MPLS Average Selling Price (available for Global and Regional data only)

  IP/Ethernet Aggregation Average Selling Price (available for Global and Regional data only)

  ATM/MPLS Average Selling Price (available for Global and Regional data only)

Companies covered in this Forecast

Alaxala Networks Corporation

Alcatel-Lucent

Brocade Communications Systems, Inc. / Foundry

Ciena Corporation

Cisco Systems, Inc.

ECI Telecom Ltd.

Ericsson / Redback

Extreme Networks, Inc.

Force10 Networks, Inc.

Fujitsu Ltd.

Hitachi Cable, Ltd.

Huawei Technologies Co., Ltd.

Juniper Networks, Inc.

NEC

Nokia Siemens Networks

Nortel Networks Ltd.

Tellabs, Inc.

ZTE Corporation

Others

Charts 1-50: Results and Forecasts for 2005 - 2011F

Chart 1:        Top-5 Vendors' Global Core IP/MPLS Equipment and Services Revenue ($ Millions)

Chart 2:        Top-5 Vendors' Global Edge IP/MPLS Equipment and Services Revenue ($ Millions)

Chart 3:        Top-5 Vendors' Global IP/Ethernet Aggregation Equipment and Services Revenue ($ Millions)

Chart 4:        Top-3 Vendors' Global ATM/MPLS Equipment and Services Revenue ($ Millions)

Chart 5:        Top-5 Vendors' Global Carrier-Class Switching and Routing Equipment and Services Revenue ($ Millions)

Chart 6:        Top-5 Vendors' Global Core IP/MPLS Equipment and Services Revenue Market Share (%)

Chart 7:        Top-5 Vendors' Global Edge IP/MPLS Equipment and Services Revenue Market Share (%)

Chart 8:       Top-5 Vendors' Global IP/Ethernet Aggregation Equipment and Services Revenue Market Share (%)

Chart 9:        Top-3 Vendors' Global ATM/MPLS Equipment and Services Revenue Market Share (%)

Chart 10:       Top-5 Vendors' Global Carrier-Class Switching and Routing Equipment and Services Revenue Market Share (%)

Chart 11:       Top-5 Vendors' Core IP/MPLS Equipment and Services Revenue in EMEA

Chart 12:       Top-5 Vendors' Edge IP/MPLS Equipment and Services Revenue in EMEA

Chart 13:       Top-5 Vendors' IP/Ethernet Aggregation Equipment and Services Revenue in EMEA

Chart 14:       Top-3 Vendors' ATM/MPLS Equipment and Services Revenue in EMEA

Chart 15:       Top-5 Vendors' Carrier-Class Switching and Routing Equipment and Services Revenue in EMEA

Chart 16:       Top-5 Vendors' Core IP/MPLS Equipment and Services Revenue Market Share in EMEA

Chart 17:       Top-5 Vendors' Edge IP/MPLS Equipment and Services Revenue Market Share in EMEA

Chart 18:       Top-5 Vendors' IP/Ethernet Aggregation Equipment and Services Revenue Market Share in EMEA

Chart 19:       Top-3 Vendors' ATM/MPLS Equipment and Services Revenue Market Share in EMEA

Chart 20:       Top-5 Vendors' Carrier-Class Switching and Routing Equipment and Services Revenue Market Share in EMEA

Chart 21:       Top-5 Vendors' Core IP/MPLS Equipment and Services Revenue in Asia Pacific

Chart 22:       Top-5 Vendors' Edge IP/MPLS Equipment and Services Revenue in Asia Pacific

Chart 23:       Top-5 Vendors' IP/Ethernet Aggregation Equipment and Services Revenue in Asia Pacific

Chart 24:       Top-3 Vendors' ATM/MPLS Equipment and Services Revenue in Asia Pacific

Chart 25:       Top-5 Vendors' Carrier-Class Switching and Routing Equipment and Services Revenue in Asia Pacific

Chart 26:       Top-5 Vendors' Core IP/MPLS Equipment and Services Revenue Market Share in Asia Pacific

Chart 27:       Top-5 Vendors' Edge IP/MPLS Equipment and Services Revenue Market Share in Asia Pacific

Chart 28:       Top-5 Vendors' IP/Ethernet Aggregation Equipment and Services Revenue Market Share in Asia Pacific

Chart 29:       Top-3 Vendors' ATM/MPLS Equipment and Services Revenue Market Share in Asia Pacific

Chart 30:       Top-5 Vendors' Carrier-Class Switching and Routing Equipment and Services Revenue Market Share in Asia Pacific

Chart 31:       Top-5 Vendors' Core IP/MPLS Equipment and Services Revenue in Latin America

Chart 32:       Top-5 Vendors' Edge IP/MPLS Equipment and Services Revenue in Latin America

Chart 33:       Top-5 Vendors' IP/Ethernet Aggregation Equipment and Services Revenue in Latin America

Chart 34:       Top-3 Vendors' ATM/MPLS Equipment and Services Revenue in Latin America

Chart 35:       Top-5 Vendors' Carrier-Class Switching and Routing Equipment and Services Revenue in Latin America

Chart 36:       Top-5 Vendors' Core IP/MPLS Equipment and Services Revenue Market Share in Latin America

Chart 37:       Top-5 Vendors' Edge IP/MPLS Equipment and Services Revenue Market Share in Latin America

Chart 38:       Top-5 Vendors' IP/Ethernet Aggregation Equipment and Services Revenue Market Share in Latin America

Chart 39:       Top-3 Vendors' ATM/MPLS Equipment and Services Revenue Market Share in Latin America

Chart 40:       Top-5 Vendors' Carrier-Class Switching and Routing Equipment and Services Revenue Market Share in Latin America

Chart 41:       Top-5 Vendors' Core IP/MPLS Equipment and Services Revenue in North America

Chart 42:       Top-5 Vendors' Edge IP/MPLS Equipment and Services Revenue in North America

Chart 43:       Top-5 Vendors' IP/Ethernet Aggregation Equipment and Services Revenue in North America

Chart 44:       Top-3 Vendors' ATM/MPLS Equipment and Services Revenue in North America

Chart 45:       Top-5 Vendors' Carrier-Class Switching and Routing Equipment and Services Revenue in North America

Chart 46:       Top-5 Vendors' Core IP/MPLS Equipment and Services Revenue Market Share in North America

Chart 47:       Top-5 Vendors' Edge IP/MPLS Equipment and Services Revenue Market Share in North America

Chart 48:       Top-5 Vendors' IP/Ethernet Aggregation Equipment and Services Revenue Market Share in North America

Chart 49:       Top-3 Vendors' ATM/MPLS Equipment and Services Revenue Market Share in North America

Chart 50:       Top-5 Vendors' Carrier-Class Switching and Routing Equipment and Services Revenue Market Share in North America