DSL Aggregation Ports Up 2%, Revenue Down 2% in 1Q05; Subscribers Up 70% in 2004

Worldwide EMEA Asia Pacific North America

Infonetics: Worldwide DSL aggregation hardware DSL port shipments increased 2% to 16.6 million in 1Q05 following a 9% increase in 4Q04 and an 11% increase in 3Q04, and revenue dropped 2% to $1.4 billion following a 14% increase in 4Q04, according to Infonetics Research latest market share report, DSL Aggregation Hardware. DSL ports will continue steady annual growth through 2008, while revenue will stay even in 2005, then grow slowly through 2008. Despite carrier capex reductions, money is still being spent on DSL, and DSL subscriber growth continues to be strong. Worldwide DSL subscribers jumped 70% to 98.6 million between 2003 and 2004 and are expected to grow to over 195 million in 2008.

In the first quarter of 2005, the EMEA and Asia Pacific regions accounted for 75% (almost 13 million) of all ports shipped, but the big surprise came from the CALA region, which jumped an amazing 134% between 4Q04 and 1Q05 to match North America’s output of 2 million DSL ports. Some major deployments are underway in the population centers on the Andean-Brazilian continent (ABC), explaining the surge in CALA’s DSL port shipments. The other 3 world regions followed the usual pattern of a down first quarter, allowing the usually much smaller CALA to reach parity with North America, if only for a quarter.

1Q05 Market Highlights

• Alcatel, Huawei, and Siemens are the top 3 leaders in worldwide DSL aggregation hardware DSL port and revenue market share

• Alcatel and Huawei have been in the top 2 positions for a year

• DSLAMs make up 61% of total DSL aggregation hardware revenue, and next gen DLCs and BLCs comprise 39%

• Worldwide ATM DSLAM revenue dropped 7% and ports are flat

• Worldwide IP DSLAM revenue jumped 20% and ports jumped 15% from 4Q04

• 37% of total DSL revenue comes from EMEA, 29% from Asia Pacific, 20% from North America, and 14% from CALA

. DSL Aggregation Hardware report Publ 20050613