Gartner Dataquest Says Worldwide Ethernet Switching Market Remained Weak in the Second Quarter of 2002.

Business Editors

SAN JOSE, Calif.--(BUSINESS WIRE)--Aug. 13, 2002

The Ethernet switching market continued to struggle as worldwide Ethernet switching port shipments reached 38.5 million units in the second quarter of 2002, according to preliminary results from Dataquest Inc., a unit of Gartner, Inc. (NYSE: IT)(NYSE: ITB).

"The market has yet to see any significant return to corporate buying, and in the consumer market, buying appears to have fallen back in some regions," said Rachna Ahlawat, senior analyst for Gartner Dataquest's worldwide telecommunications and networking group. "Economic uncertainty in the telecommunications sector continued to undermine business confidence and this has not only resulted in a decline in spending by service providers, but has also affected large corporations expenditures as they adopt a more conservative approach and further tighten their budgets."

Cisco Systems had a commanding lead in the market, as its second-quarter shipments were three times larger than its nearest competitor, 3Com (see Table 1). In fact, Cisco shipped more units than 3Com, Linksys, D-Link and NetGear combined.

Table 1
Preliminary Worldwide Ethernet Switching Vendors' Port Shipments
Estimates for 2Q02
(Thousands of Units)
----------------------------------------------------------------------
Vendor               2Q02 Port Shipments         2Q02 Market Share (%)
----------------------------------------------------------------------
Cisco                           14,188.4                          36.8
3Com                             4,097.0                          10.6
Linksys                          3,613.9                           9.4
D-Link                           3,153.7                           8.2
NetGear                          3,057.7                           7.9
Others                          10,407.3                          27.0
Total Market                    38,518.0                         100.0
----------------------------------------------------------------------
Source: Gartner Dataquest (August 2002)

Cisco also dominated the market in terms of vendor revenue as its revenue surpassed $1.9 billion in the second quarter of 2002 (see Table 2). Nortel was the No. 2 vendor in the market, as its revenue totaled $160 million.

Table 2
Preliminary Worldwide Ethernet Switching Vendors' Revenue Estimates
for 2Q02
(Millions of Dollars)
----------------------------------------------------------------------
Vendor              2Q02 Vendor Revenue          2Q02 Market Share (%)
----------------------------------------------------------------------
Cisco                           1,958.5                           68.5
Nortel                            160.1                            5.6
3Com                              118.8                            4.2
Extreme                            98.6                            3.4
Enterasys                          82.0                            2.9
Others                            441.4                           15.4
Total Market                    2,859.4                          100.0
----------------------------------------------------------------------
Source: Gartner Dataquest (August 2002)

The second-quarter results make a second-half upturn less likely. Gartner Dataquest said Ethernet switching vendors should carefully plan their activities for the second half of 2002 and prepare themselves to respond to possibly rapid changes in demand.

"Vendors should also watch the markets in North America, Japan and Europe more closely for signs of an increase in demand," Ahlawat said. "Most vendors are channeling their resources toward the Asia/Pacific market, as demand in North America and Western Europe is not likely to increase until the first quarter of 2003."

This analysis is provided by Gartner Dataquest's worldwide Telecommunications and Networking group. This group provides an analysis for the full spectrum of telecom and networking issues. To keep up to date on the latest telecommunications issues, please visit Gartner's Telecommunications Focus Area at http://www.gartner.com/1_researchanalysis/focus/telecom_fa.html. To purchase the report or subscribe to Gartner Dataquest programs, please call 408-468-8000 or go to www.gartner.com.

Gartner Dataquest is the recognized leader in providing the high-technology and financial communities with market intelligence for the semiconductor, computer systems and peripherals, communications, document management, software and services sectors of the global information technology industry.

Gartner, Inc. is a research and advisory firm that helps more than 10,500 clients understand technology and drive business growth. Gartner's businesses consist of Gartner Research, Gartner Consulting, Gartner Measurement and Gartner Events. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, and has 4,000 associates, including 1,200 research analysts and consultants, in more than 90 locations worldwide. Fiscal 2001 revenue totaled $963 million. For more information, visit www.gartner.com.