Switch market showing signs of recovery

The worldwide enterprise switch market is beginning to pull clear of the recession, staging a recovery in the fourth quarter of 2009 despite an overall yearly decline of 14.9 percent, according to a report by analyst firm Canalys.

During the fourth quarter of 2009 sales grew 15.5 percent against Q3 sales, contributing to overall sales figures for the year of US$21.7bn (A$23.69bn).

Matthew Ball, a senior analyst at Canalys, said the figures were what the company expected to see given the economic conditions the market went through, but said the Q4 figures gave cause for cautious optimism.

"The fourth quarter figures were better than expected but the market went down so much in 2009 they didn't impact on overall figures a great deal. Fourth quarter figures are always slightly exaggerated as firms use up budgets before the end of the calendar fiscal year," he said.

The year had mixed fortunes for the leading switch companies. Market leader Cisco saw its market share decline by 4.7 percent to 68.1 percent in 2009, while HP increased its position by 3.2 percent to 8 percent.

While Cisco still remains dominant, Ball said HP's growth looked set to continue and that its proposed acquisition of the number three vendor 3Com would make it a "clear challenger to Cisco".

"HP is very strong now in this area and is making it a big focus of its business. It's acquisition of 3Com will give it a range of new products including those in the data centre which could help it take on Cisco in the large enterprise space," he said.

Juniper Networks also did well, more than doubling switch shipments to extend its market position from 0.7 per cent to 1.9 percent. Brocade saw a slight increase, climbing 0.4 percent to reach a 2 percent market share.

Bell said that he expected Cisco to come under increasing competition from the likes of Avaya, in light of its takeover of Nortel’s networking business, and IBM, after it signed deals with Juniper and Brocade to deliver switching equipment.

"Cisco's market share will not decrease in 2010 and if anything it may well grow again, but by 2011 it will be a different story as growing number of firms move in to this space and bring more competition to the market," he said.