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Ethernet Extender - Report: Carrier Ethernet Market Thriving in Recession, to Hit $32 Billion in 2013
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April 07, 2009

Report: Carrier Ethernet Market Thriving in Recession, to Hit $32 Billion in 2013

By Michael Dinan
TMCnet Editor

Despite projected drops in the Ethernet switch market, a Campbell, California-based market research firm this week is predicting that the need to handle rapidly growing traffic, including video-based communications, the carrier Ethernet market will reach $32 billion globally in 2013.

According to Michael Howard, a principal analyst at Infonetics, this recession favors carrier Ethernet technologies and products because they’re a less expensive alternative to legacy equipment.
“In fact, service provider investment in carrier Ethernet equipment is growing faster than overall telecom capex,” Howard said.
According to the firm’s biannual “Carrier Ethernet Equipment” report, the largest market investments will be in IP core and edge routers, carrier Ethernet switches and optical gear.
That may be, but the tone of Infonetics’ report doesn’t jibe with another recent study, from Redwood City, California-based IT research firm Dell’ (News - Alert)Oro Group, which predicts that the Ethernet switch market declined in the mid-single digits in the fourth quarter of 2008 and now is expected to see its largest-ever drop.
As TMCnet reported, officials at Dell’Oro say that the market will decline more than 10 percent during the first three months of 2009, losing more than $1 billion in its quarterly run rate.
According to Alan Weckel, director at Dell’Oro, although it’s the most significant first quarter forecasted decline in Ethernet switch history, the first quarter typically is seasonally weak.
“Businesses are canceling or delaying projects and distributors are lowering inventory levels,” Weckel said. “In addition, deteriorating macroeconomic conditions have coincided with what is usually the market’s weakest quarter of the year, exacerbating the decline in the first quarter of this year.”
That may be – yet, as TMCnet reported, one company – Littleton, Colorado-based tw telecom inc., a managed network services provider – has bolstered its next-generation network by adding a series of Ethernet access switches from the world’s largest maker of computer networking gear.
Officials at tw telecom say so-called “ME 3400 Series Switches“ from San Jose, California-based Cisco Systems Inc. are improving the flexibility, reliability and security of their integrated, converged services.
The new report from Infonetics (see chart at right) predicts that Ethernet microwave will emerge as the fastest-growing segment based on its use for mobile backhaul, and that many service providers use Ethernet to attract new customers with a lower cost-per-bit than traditional WAN services.
At the same time, according to Infonetics, providers will reduce capex and opex by installing a single 100M or GE link to initially sell lower speeds, but upsell to higher speeds later without changing equipment at either the CO or customer location.
Howard said that carrier Ethernet is one of the key technologies globally integral to IP next gen network transformation projects pushing the move from TDM to packet based networks.
“These IP NGN projects depend heavily on IP, MPLS, and Ethernet, and gradually will employ the use of Ethernet transport instead of SONET/SDH,” he said. “Service providers spent $17 billion on carrier Ethernet equipment in 2008, and will increase their spending every year at a healthy clip over the next 5 years.”

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Michael Dinan is a contributing editor for TMCnet, covering news in the IP communications, call center and customer relationship management industries. To read more of Michael's articles, please visit his columnist page.

Edited by Michael Dinan

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