Infonetics Research, a market research and consulting firm, recently released the first quarter (1Q09) edition of its ‘Ethernet and Application Switches’ report, which indicated that the Ethernet switch market dropped more than $1 billion in the first quarter of 2009.

In general, an Ethernet Switch is a local area network (LAN) interconnection device very similar to a bridge and supports a larger number of connected LAN segments and has a richer management capability. It operates at the data link layer (layer 2) of the OSI reference model.

The increase in usage of bandwidth-hungry applications and services had kept the Ethernet Switch market in good position. Despite increased demand for Ethernet and application switches, the market saw regression due to decline in emerging markets, wiring closet upgrades, and datacenter consolidation.

Infonetics' Ethernet and application switch report that tracked companies such as 3Com/H3C, Adtran, Alcatel-Lucent, Cisco, Citrix Netscaler, D-Link, Huawei, Linksys, NETGEAR, Nortel (News - Alert), HP ProCurve, Radware, SMC, and others, indicated that the Ethernet switch market plunged 26 percent sequentially, from $4.4 billion to $3.3 billion in first quarter of 2009.

In addition, all switch port shipments were down during this period, but 1G PoE switches, 10G layer 3 fixed managed switches, and 10G chassis switches still saw a little brighter side of the market. Even the adoption of 1G is farther along in the web-managed switch segment than the fully managed fixed layer 2 and 3 switch segments, says report.

However, Infonetics predicts that the Ethernet switch market will turn positive by next year even though year-over-year growth will decline for the remainder of 2009. Even application switch segment saw decline with revenue down more than 20 percent in 2008. Except for Citrix and Radware (News - Alert), al the other vendors saw their decline, says report.

Matthias Machowinski, directing analyst, enterprise Voice and Data at Infonetics Research (News - Alert), said, "Exacerbated by weak worldwide economic conditions, the Ethernet switch market dropped more than $1 billion in the first quarter of 2009, much more than the normal seasonal first-quarter drop. Demand for Ethernet and application switches is still there, but budgets are under pressure, so we witnessed a shift to lower-priced products, such as 100M PoE switches instead of 1G PoE."

According to other sources, the Ethernet Switch market had a good start in 2008. The global Ethernet switch market grew by five percent from 2007 to reach $18.2 billion in 2008. The 10Gbps fixed Ethernet switches generated twice more revenue than in 2007, while application switch market dropped by four percent to $272 million in the fourth quarter of 2008. The same year vendors sold nearly 56.4 percent more 1Gbps fixed Power-over-Ethernet ports.