Secure Router Shipments Jump 19% in 1Q05

Global North Ameria EMEA, Asia Pacific, CALA

Infonetics Research : Demand for enterprise routers, particularly secure routers, remains high even as revenue continues to slip quarter-over-quarter across most enterprise router categories due to ongoing price pressure

Worldwide enterprise router revenue totaled $750 million in 1Q05, down 9% from 4Q04, and 20% lower than a year ago, while unit shipments increased 4%. This trend is expected to continue, with unit shipments growing to 1.9 million in 2008. The increase in overall unit shipments comes mostly from the burgeoning secure enterprise router segment, which jumped 19% to 53,000 units between 4Q04 and 1Q05, while revenue dipped 3% to $96.4 million. Meanwhile, the standard enterprise router segment eked out a mere 1% unit shipment increase while revenue dropped 9% to $653 million in 1Q05. Unit revenue has been dropping faster in the standard portion of the market, so many vendors are eyeing the more lucrative secure router segment.

Overall demand for routers was solid in the first quarter, as evidenced by the 4% sequential increase in unit shipments, but vendors saw significant pricing pressure, and revenue per unit dropped almost across the board,. The 11% revenue-per-unit decrease at Cisco had the most profound effect on the market.

1Q05 Market Highlights

• Cisco continues to lead the worldwide enterprise router market by a wide margin, capturing the majority of both revenue and unit market share

• Vanguard is second for revenue, Allied Telesyn is second in unit shipments

• High-end routers make up 50% of worldwide enterprise router revenue, mid-range routers make up 47%, and low-end/SOHO routers make up 2%

• Secure routers now make up 13% of worldwide revenue, up 1% from 4Q04, and will grow to 27% of the market by 2008

• 41% of total enterprise router revenue was from North America, 36% from EMEA, 19% from Asia Pacific, and 3% from CALA

Enterprise Routers quarterly worldwide market share and forecast report Publ 20050526