Healthy Spend

Enterprise router and switch spending continues to grow across the Europe, Middle East and Africa (EMEA) region, driven in part by strong spending from the region’s service provider community, according to the analyst team at research house Canalys.

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By  Stuart Wilson Published  October 16, 2005

|~||~||~|Enterprise router and switch spending continues to grow across the Europe, Middle East and Africa (EMEA) region, driven in part by strong spending from the region’s service provider community, according to the analyst team at research house Canalys. According to Canalys, enterprise router sales surged 66.9% year-on-year in the second quarter of 2005 in the region to hit US$820m, with Cisco continuing to lead the vendor pack. Posting sales growth of 45.4%, networking giant Cisco continues to dominate the sector, accounting for more than three quarters of the total enterprise router market in the second quarter. While Cisco remains the major force in the enterprise router segment, rival vendors continue to nip at its heels and make their presence felt in this lucrative market sector. Second placed Juniper almost trebled its sales year-on-year in the second quarter of 2005 in EMEA, boosting its market share from 8.3% to 14.5%. Canalys reckons that Juniper has now become a potent competitor to Cisco in the service provider market. “Juniper is also looking to broaden its market beyond service providers, with its J-series of enterprise routers in the early phase of adoption,” explained Alessandra Fitzpatrick, director and senior analyst at Canalys. “Juniper will want to build on the success of the NetScreen channel. With a new partner programme in J-Rewards, it aims to increase its profile among enterprise networking distributors and resellers.” “Cisco has benefited from its investment in the new Carrier Routing Systems 1 (CRS-1). Adoption of the CRS-1 has been better than anticipated across EMEA,” Fitzpatrick added. Nortel and 3Com both outstripped the overall market growth rate in the second quarter, but coming from very low starting points their combined sales still only accounted for 2.3% of the total addressable market according to the Canalys figures. While not quite matching the heady increases reported in the enterprise router space, the enterprise switch market also performed strongly in EMEA, with second quarter sales climbing 29.9% year-on-year pushing the market value up to US$1.35 billion. Once again, Cisco picked up the lion’s share of the market, pulling in EMEA enterprise switch sales of US$805m — 59.6% of the total market. However, this represented a growth rate of 19.9% meaning that Cisco’s market share actually declined 5% year-on-year. HP ProCurve cemented its second place in the EMEA enterprise switch rankings, boosting its sales 32.1% year-on-year to US$90m — 6.7% of the total addressable market. “ProCurve had an inventory issue in the first quarter after a strong fourth quarter last year,” said Andy Buss, senior analyst at Canalys. “The result was excess inventory of layer three and higher switches. This has now worked its way out, and shipments of these are back on track.” Nortel, 3Com and Extreme Networks picked up third, fourth and fifth spots respectively according to Canalys. For Nortel, which more than trebled its EMEA enterprise switch sales year-on-year, the second quarter marked a positive step forward. “Nortel has taken steps to move forward, re-branding the company and simplifying the naming of its products. But the departure of two key executives has led to question marks hanging over the strategy,” said Buss. 3Com witnessed a 23.4% fall in enterprise switch sales in EMEA during the second quarter, with revenues from this product segment falling to US$46m. “Although it is its largest market, EMEA has been a troubled region for 3Com of late,” added Buss. “The recent appointment of Paul Ros as vice president and general manager for EMEA is intended to turn this situation around.” “The 3Com-Huawei joint venture is also starting to pay dividends, as its revenues mount and it gets close to breaking even, relieving the pressure on investment required from 3Com,” he concluded. ||**||

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