Telecom Boosted by Service Provider Router Market, Report Says

The telecom market may not be dead yet.

As service provider routers (SPR) continue to form the basis for additional telecom services and next-generation infrastructure, the worldwide SPR market totaled $1.9 billion in 2002, according to a report released today from Gartner Dataquest.

The SPR market ended 2002 on a positive note with the core SPR segment reaching $185 million in Q4, a recovery that Dataquest said indicates that the excess capacity may have been utilized and carrier space spending will resume in this market.

Core routers (carrier class backbone routers) were driven by the edge router segment (carrier class edge and aggregation routers which consolidate high-speed Internet traffic and provide IP services), as an increase of traffic in the edge eventually results in more bandwidth requirements in the backbone, the market researched reported.

"Overall IP routing market growth is a direct result of new market penetration and a trend toward transformation from existing networks to an IP/MPLS consolidation," said Jennifer Liscom, principal analyst for Dataquest's worldwide telecommunications and networking group, in a statement. "Customers as a whole are looking for more than just routing functionality. They're requiring value-added services in addition to complementing their existing platforms and expanding to new technologies."

The top 2 vendors, Cisco Systems and Juniper, accounted for 86.9 percent of all SPR revenue in 2002. Cisco led the market with 59.6 percent of worldwide revenue, followed by Juniper with a market share of 27.3 percent, Dataquest said.

Cisco also led the market in terms of shipments, scoring 55.3 percent of the market. Here, Juniper also remained No. 2 with 28.7 percent market share, pushed by its lead in the broadband aggregation segment of the market and a 10 percent increase in the core market in Q4.

Still, Dataquest's outlook for 2003 was a bleak one.

"Although the SPR market showed signs of leveling off at the end of 2002, the outlook for the market remains relatively flat in 2003," Liscom said. "Strong sales in edge and broadband aggregation routers will lead to recovery in the core, but recovery for the SPR market is still not expected until early 2004."