IP router and switch market posts impressive 13% growth in 4Q05.

Ovum-RHK: Alcatel and Tellabs lead market share gainers. Analysis of fourth-quarter 2005 results for IP service infrastructure vendors. Revenues for the segment grew 13% versus last year, and 2% sequentially.

4Q05 and full-year 2005 highlights for the IP services infrastructure market include:

• 4Q05 revenues: $2.1 billion, up 13% versus 4Q04

• 2005 revenues: $8.1 billion, up 12% compared to full-year 2004

• Cisco revenues were down 1% sequentially; up 6% versus 4Q04

• Juniper revenues increased 3% sequentially; up 18% versus 4Q04

• Alcatel revenues increased 17% sequentially; 45% versus 4Q04

• Redback revenues increased 63% sequentially; 85% versus 4Q04

• Tellabs revenues increased 120% sequentially from a small base

• Cisco lost over a point of market share; Tellabs gained a point.

With strong sequential growth of 11%, North America outweighed 3-5% declines in Europe, Asia-Pacific and Latin America, resulting in an overall market increase versus 3Q05. Edge IP/MPLS routers grew most strongly among product groups, with 4% growth. IP/Ethernet switch/routers grew 2%. The core IP/MPLS and ATM/MPLS switch categories were essentially flat compared to 3Q05.

The big story continues to be the continuing fragmentation of the edge market with Alcatel, Tellabs and Redback Networks all experiencing strong growth in 4Q05, . Ethernet VPNs, Ethernet-based broadband aggregation, wireless aggregation and frame relay/ATM interworking are creating new opportunities, in addition to the IP-VPN and dedicated Internet access applications which Cisco and Juniper have historically dominated. Seery also noted that the overall segment growth of 12% for the year is similar to growth seen in operator capex. Fourth-quarter 2005 results for IP service infrastructure vendors Publ 20060221