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Service Provider Switching and Routing Market to Hit $15.4 Billion

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July 18, 2012

Service Provider Switching and Routing Market to Hit $15.4 Billion

By Michelle Amodio, TMCnet Contributor

According to market research from Ovum (News - Alert), the global service provider switching and routing (SPSR) market is expected to improve on recent performance and grow 4.4 percent this year to $15.4 billion. There was no recorded growth in Q1, noted the market research firm, as the market was off to a slow start.

“In 1Q12, annualized revenue growth paused. Declines in the IP/MPLS core and access switch and router segments were nearly balanced out by gains in the IP/MPLS edge and IP/Ethernet product segments," stated David Krozier, principal analyst, network infrastructure, Ovum. "The strongest performance in 1Q12 was in the smallest geographic segment, South & Central America (SCA), with sales up 25 percent from the year-ago quarter. North America (NA) produced 13 percent growth, while the Asia-Pacific market declined by 0.7 percent and the EMEA markets fell sharply by 18.5 percent."

Alcatel-Lucent (News - Alert) and Cisco were singled out for their first quarter performance.

"Alcatel-Lucent turned in a particularly strong performance in South and Central America in the quarter while Cisco (News - Alert) produced record revenues in North America," Krozier said, adding that both vendors "managed double-digit growth in the Asia-Pacific region to outpace global growth."

In related news, Ovum also reported that increased Internet traffic will drive the demand for switches and routers in service providers’ networks.

“It is going to cost carriers if they want to keep their customers,” said Krozier. “Carriers will need to invest in growing their IP infrastructure or risk losing subscribers. In developing nations, carriers are building out their 3G wireless networks, while developed nations are investing in LTE to accommodate mobile bandwidth demand.”

IDC (News - Alert) analysts are forecasting that the global end-user demand for data will drive wired and mobile broadband traffic from the 9,665 petabytes per month in 2010 to 116,539 petabytes a month in 2015.

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Edited by Brooke Neuman

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