The Frost & Sullivan research service titled World Carrier Switch and Router Markets provides insights into the current trends in this market on a global basis, the factors influencing the current growth in the market, and the market segments that are contributing the most revenues to the total market. The research also highlights the potential of high growth segments such as Carrier Ethernet, which is further divided into four sub-segments. In addition, two emerging segments, Demarc and Ethernet in the First Mile, are also discussed. In this research, Frost & Sullivan's expert analysts examine the following markets: Internet Exchange, Service Provider Core, Multiservice Edge Router, Ethernet Service Edge, Broadband Aggregation (BRAS), Internet Data Center/Colocation/Hosting, ATM switch, Ethernet Aggregation, Ethernet Access, and Demarcation/Network Termination Device.
Market Overview
Core Routers and Carrier Ethernet Segments Drive Market Growth
The global carrier switch and router market raked in almost $10 billion in revenues during 2006, and is poised for solid growth over the next three years. The Service Provider Core Routers and Carrier Ethernet segments drove a sizeable proportion of the growth. The fast-paced adoption of Carrier Ethernet has in turn led to the emergence of two segments, namely Demarc devices and Ethernet in the First Mile equipment. The momentum stems from service providers needing to deploy next-generation infrastructure that cost-effectively delivers high-bandwidth services to the business, consumer, and wholesale markets. Moreover, service providers need to lower the capital expenditure/operational expenditure (CAPEX/OPEX) even as they increase average revenue per user (ARPU), and these factors are influencing the way network elements are evolving. For instance, the broadband remote access server, which is a specialized router, is increasingly being viewed as a set of features rather than a stand-alone device.
Despite the strong numbers, CAPEX realities and carriers’ inexperience in new technologies and architectures are affecting equipment deployment. "Post the telecom downturn, carriers' approach to CAPEX has changed considerably, in that the carriers want to and need to offer new and differentiated services, but are reluctant to aggressively increase the CAPEX to achieve ARPU goals," notes the analyst of this research service. "Today, vendors could easily spend months with carriers defining the business case for, say, a Metro Ethernet service as well as designing the optimum network architecture."
Continued Increase in Bandwidth Usage by Enterprises and Consumers Ensures Future Growth
The second generation of web-based services and increase in the traffic generated at the consumer end due to peer-to-peer applications such as sharing of media files and online gaming have clearly altered the traffic pattern and significantly increased the amount of traffic being sent across the Internet. Internet Protocol Television (IPTV) and its different flavors (broadcast, unicast) are also expected to very strongly drive the consumer traffic. Additionally, connectivity to remote sites and high-speed Internet access are increasing enterprise traffic.
Among the market segments, the Carrier Ethernet switch/router equipment market accounted for the largest share of the total carrier switch and router market in 2006, followed by the Service Provider Core segment. "Going forward, strategic partnerships could be a key factor in the global carrier switch and router markets, especially with carriers, anticipating a certain level of demand, deploying networks with which they may have little experience," says the analyst. "Thus, service providers are looking for strong technical and commercial partners among equipment vendors to help them define the architecture and business case and, hopefully, generate customers."
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