Summary
As the world economy collapsed last year, sales of carrier Ethernet gear grew 31% to $17 billion, having grown 27% the year before. Mobile operators finally are beginning to embrace carrier Ethernet as a way to open up backhaul networks for data traffic. This analysis discusses the fact that carrier Ethernet is enabling smaller gear players to keep on growing – right through the economic downturn.
Analysis
While other parts of the telecom industry are taking a beating, smaller carrier Ethernet gear vendors are continuing to see growth, buoyed by the technology’s efficiency and cost effectiveness. It appears that carrier Ethernet equipment market was “defying” the slow economy, growing faster than overall telecom service provider spending. The economic downturn favors carrier Ethernet technologies and products, as they are a less expensive alternative to legacy equipment.
And it’s not just Ethernet equipment that’s doing well in the downturn. The US Ethernet services market grew 43% last year, in terms of installed ports. Even some of the companies with less than 5% of the U.S. Ethernet services market are nevertheless thriving atop the rising tide of Ethernet service demand.
10 gigabit Ethernet switches, which are increasingly in demand atop server racks in data centers,should continue to see port and revenue growth this year. In the data center, capacity demands continue to escalate due not just to the likes of Facebook and YouTube, but also to an increasing demand for managed services and applications, an outsourcing imperative fueled by enterprise frugality and, in turn, fed by the bad economy itself.
