Report: Router Revenues Rise 21 Percent in '08, to $11.3 Billion

Revenues from the networking devices that direct Internet traffic increased 21 percent from 2007 to 2008, according to a Bethesda, Maryland-based market research and consulting firm.

 

Officials at Dittberner Associates, Inc. say carrier-grade routers generated about $11.3 billion in revenues worldwide – though within 2008 the market saw declines sequentially by quarter.

 

“Even with the expectation of a decline in fixed line broadband access shipments this year, Dittberner (News - Alert) had originally expected a 30 percent increase in router revenue for 2008,” the firm says. “This was because flat growth in new broadband subscribers would be offset by an increase in bandwidth per user due to the growth in video traffic.”

 

Consumer and business use of broadband Internet is making headlines. Yesterday, President Barack Obama signed into law a widely anticipated $787 billion economic stimulus package that includes $7.2 billion in funding for nationwide broadband deployment.

 

As TMCnet reported this week, one industry expert – Craig Settles, president and founder of Oakland-based Successful.com – says that broadband networks will impact other rural areas in several ways, many of them in a relatively short time.

 

“First, people with businesses, from service and consulting to small goods, will be able to sell their products to literally a worldwide audience once they have high-speed access,” Settles told TMCnet in an interview. “People who are out of work or who want a little extra financial security will start home-based businesses.

 

Settles also said he expects to see a surge in new businesses moving to rural areas once these networks are in place. Many industries, including light manufacturing and agriculture, depend on high-speed automation and communication, he said.

 

“I’ll go out on a limb and say that midsize companies, given the choice between outsourcing to another country and setting up new operations in a rural area or small town with broadband, would likely go with the latter because it still has significant cost savings, but without the hassles of managing offshore operations,” Settles said.

 

It isn’t clear yet what impact the nation’s plan for broadband deployment will have on router revenues.

 

According to Dittberner, 2008’s 21 percent increase was less than originally forecast, yet still strong.

 

Here’s how the firm diagrams global carrier router revenue market share by vendor in its new report, “Service Provider Switch and Router Market Analysis”:

 

 

The top five router vendors are Cisco (News - Alert), Juniper, Huawei, Alcatel-Lucent and Ericsson. Cisco’s (News - Alert) quarterly revenue declined by 12 percent, Dittberner says, while Juniper’s declined by 6 percent. Huawei and Alcatel-Lucent both were up slightly, while Ericsson (News - Alert) posted another quarter of strong growth, according to the firm.

 

Going forward, Dittberner said it expects 10 percent revenue growth in 2009, based on forecasts of higher fixed broadband port shipments than in 2008, and a definite increase in bandwidth per user.

 

“Even with the general state of the economy for next year, as fixed line broadband slows, mobile broadband is expected to take up the slack pushing carrier router revenue to historically higher levels for years to come,” the firm says.