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Switch market gains momentum as recovery takes hold

Alex Scroxton
The latest Canalys market figures on the worldwide enterprise switching market point to gathering economic recovery, with total end-user value beginning to show sequential improvements.

Across the full-year, switch shipments totaled $21.7bn, a 14% slide on 2008, but in the final quarter of 2009, the market was worth a total of $4.7bn, up 15.5% on Q3 2009, though down 5.5% year-on-year.

The first three quarters of the year were particularly tough, analysts said, because businesses were assessing the impact of the banking crisis before committing to major network spends.

Canalys said the recession had given disruptive vendors the chance to start usurping their competitors' installed bases, and sure enough Cisco was among the big losers in the fourth quarter, with shipment values falling 12% to $3.2bn. The networking colossus maintained its market leading position, although this too eroded by 4% from 72.8% to 68.1%.

"HP has made the most gains in 2009, with its share increasing from 5.8% in Q4 2008 to 8% in Q4 2009," said senior analyst Matthew Ball, who added that the proposed acquisition of third-placed 3Com - which held 4.6% of the market - would create a clear challenger with competitive core switching and routing products and low-cost kit for the SME market.

Ball predicted that the recent cancellation of HP and Cisco's resale contract would give HP "many opportunities to make further gains in 2010."

Brocade and Juniper Networks were also seen doing well during the last three months of the year, growing their market shares by 16.3% and 156.6% respectively, although with barely 4% of the market between them both have a long way to go before worrying Cisco.

Canalys predicted that M&A activity would continue to impact on the market in 2010, with HP's acquisition of 3Com and Avaya's acquisition of Nortel enterprise both causing disruption.

Canalys analyst Alex Smith sounded a note of caution, however, saying: "It is unclear whether the momentum seen in the latter half of 2009 will be sustained and whether sufficient confidence has returned to stimulate annual growth again."

"It is also hard to tell how much vendor incentive schemes, including 0% financing and other pricing discounts, helped prevent a bigger fall in shipments last year," he added.

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