"The carrier router and switch market hit a record-high $14.5 billion in 2011, up 8% over 2010, making it the second largest telecom market segment after mobile RAN infrastructure," notes Michael Howard, Infonetics Research's co-founder and principal analyst for carrier networks.
"Yet paradoxically, 2011 results show signs of a slowdown in the market's overall growth rate," Howard continues. "Why? Because despite continued double-digit percent annual growth in the largest market, Asia, and the smallest market, Latin America, the two mainstays of carrier routers and switches, North America and EMEA, are slowing. Still, the fundamental market drivers will pace the overall market forward, with growing fixed broadband traffic and exploding mobile broadband traffic on 3G and LTE networks pushing many service providers to upgrade their access, aggregation, and core networks, including mobile backhaul."
SERVICE PROVIDER ROUTER AND SWITCH MARKET HIGHLIGHTS
. The global service provider router and switch market, which includes IP edge routers, IP core routers, and carrier Ethernet switches (CES), grew 11% sequentially to $3.9 billion in the final quarter of 2011
. In 4Q11, the IP edge segment (the sum of IP edge routers and CES), jumped 12% sequentially and is up 8% for the year
. Cisco continues to lead the IP Edge segment by a healthy margin, commanding about a third of the global market in 2011, while its top competitors -- Alcatel-Lucent, Huawei, Juniper, ZTE -- all gained market share in 2011
. Alcatel-Lucent's strong performance propelled it into the #2 spot for global router revenue in 4Q11, and it retained #2 position for 2011 EMEA router revenue, despite not having a core router product
. Recent trends in the carrier router segment are indicative of the overall router and switch market: with the exception of 2009 during the height of the recession, router sales grew by double-digit percents each year until 2011, when they increased a relatively lower 9.9%
. North America is the only world region to post a decline in carrier router and switch spending both quarter-over-quarter in 4Q11 as well as for the full year 2011, despite the many economic growth signals in the US
. Meanwhile, EMEA had a seasonally typical budget flush, with a 21% pop in router and switch spending, despite a poorer year and the ongoing euro/Greece/debt/etc. crisis
. Ongoing network upgrade projects in South America and Mexico led to a banner year for service provider router and switch vendors in Latin America (revenue up 22% in 2011), and China and Japan propped up Asia