Cisco Makes Most of Carrier Market Doldrums
5/31/2012 -- Cisco Systems Inc. and its competitors are finding it more difficult to make money selling IP routers and switches to service provider customers.
Sales of IP edge and core routers and carrier Ethernet switches were basically unchanged, year-over-year, from Q1 of 2011 to the first quarter of 2012.
On a sequential basis, carrier router and switch sales were down by double-digits -- ?in this case, by 14 percent. In terms of sales, then, everyone is down; the good news -- for Cisco, at least -- ?is that it's not as down as its rivals. According to market watcher Infonetics Research, Cisco increased its market share in the IP edge space by more than 25 percent in Q1.
"The best way to look at the carrier router and switch market is to analyze the 'IP Edge,' the sum of edge routers and carrier Ethernet switches, since routers can switch and switches can route, and many are deployed both ways," said Michael Howard, co-founder and principal analyst with market watcher Infonetics Research, in a statement. "Cisco, Alcatel-Lucent and Juniper all gained IP Edge market share in the first quarter, Cisco the most by far, increasing its share from about 31 percent to about 39 percent quarter-over-quarter."
The triumvirate of Cisco, Alcatel-Lucent and Juniper accounted for the overwhelming majority -- a staggering 96 percent -- of global core router sales. And while all three made the most of an otherwise down quarter, Howard thinks Cisco is particularly well-positioned going forward.
"Cisco is showing signs of a regained focus, and with the biggest installed base of routers at both operators and enterprises, they have an advantage that is hard to compete with," he argued.
For one thing, the North American market -- ?traditionally one of Cisco's strongest regions -- was very strong in Q1, with sales up 27 percent sequentially (and up 9 percent, year over year).
On the other hand, the carrier space is poised to get even more fractious, thanks to Alcatel-Lucent. "Alcatel-Lucent just entered the core router market, which will shake up the vendor market share landscape once revenue from ALU?s new core router materializes later this year," Infonetics notes.
There's a reason Alcatel-Lucent has set its sights on the carrier segment: Service providers ponied up $15 billion for routing and switching gear in 2011, second only to the amount they spent on mobile RAN kit (which Infonetics pegs at more than $30 billion).
--By Stephen Swoyer
Cisco Unstoppable in WLANs -- Inside the Enterprise and Out
There's just something about the first few months of a new year.
Cisco Systems Inc. and its rivals suffered setbacks in a pair of key markets in the first three months of 2012. For starters, there was a 14 percent decline between late-2011 and early-2012 in the $15 billion routing and switching segment. (Link to accompanying article.) But the global WLAN market was also down during the same period, albeit by just 2.9 percent.
That's according to market watcher International Data Corp. (IDC), which paints a picture of a worldwide WLAN market that's much less tumultuous than the carrier routing and switching segment. According to IDC, for example, global WLAN sales for the first three months of 2012 were up by a robust 13.9 percent relative to the year-ago-period.?
Cisco controls more than half of that market. In fact, Cisco managed to increase its share of the worldwide WLAN market, albeit slightly, boosting its take from 51.0 to 52.4 percent.
Cisco's cause was likely helped by what IDC describes as "torrid growth" in the enterprise WLAN space, which was up more than a quarter (27.2 percent) over the year-ago period.
IDC attributes this growth to the juggernaut that is bring-your-own-device, or BYOD.
"The momentum behind bring your own device ... in the enterprise continues unabated, and is the single largest factor driving enterprise mobility and WLAN market growth," said Rohit Mehra, director of enterprise communications infrastructure for IDC, in a prepared release.
That isn't all, however, according to Mehra: "Along with the increasing use of Wi-Fi by service providers to offload cellular data traffic, current market drivers in key verticals will ensure the market for enterprise-class WLAN devices and solutions will see continued traction, and that the market is expected to stay vibrant for the foreseeable future."
Enterprise WLAN sales were at their most torrid in Latin American, where sales were up a staggering 73.8 percent relative to early-2011. If Cisco's strong in Latin America, it's even stronger in North America, which -- in Q1 of 2012 -- accounted for almost half of Cisco's global WLAN sales. During the same period, the North American region realized an impressive 34.5 percent boost in enterprise WLAN sales. "The positive results in the enterprise WLAN market over the last several quarters, which includes several established and emerging vendors, indicates that WLAN investments remain high on the priority list of many CIOs," said Petr Jirovsky, a senior research analyst with IDC's Worldwide Networking Trackers Group, in a statement.
Cisco saw its share of the enterprise WLAN increase by 27 percent, relative to the year-ago period. The networking giant is verging ever closer to the half-billion dollar mark in enterprise WLAN sales, with $414 million in Q1 revenues, IDC said.
--By Stephen Swoyer
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