When the 1999 third quarter numbers came in, sales in the networking equipment industry were up, way up. The worldwide networking hardware market reached $9.35 billion in the third quarter of 1999, a 16% increase over the same period in 1998, according to a new report from Cahners In-Stat Group, a division of Newton, Mass.-based Cahners Business Information. In-Stat expects the networking market to end 1999 at $36.8 billion, a 17% jump from the previous year and an all-time high.
| 1999 Network equipment market share by product segments |
Source: Cahners In-Stat Group
Growth in the third quarter was largely driven by Layer 3 switches, access concentrators, and emerging equipment markets. While slower sales growth is forecast in the fourth quarter of 1999 (an anemic 2% for a total of $9.5 billion), sales are expected to grow in 2000, impacted by the following factors:
The big players dominate the networking market. The top four vendors--3Com Corp., Cisco Systems Inc., Lucent Technologies Inc., and Nortel Networks Corp.--represented over 70% of networking revenues in the third quarter. San Jose, Calif.-based Cisco led the way with 38% of the market, followed by based 3Com, of Santa Clara, Calif. (14%), Nortel Networks, in Brampton, Ont., (13%), and Murray Hill, N.J.-based Lucent (8%). Increasingly, voice and data convergence is affecting the nature of competition in the networking market. Vendors with strong voice and data portfolios are rising to the top.
North America continues to dominate network hardware sales with purchases totaling 55% of the worldwide market, but other areas are gaining in prominence. In the third quarter, networking hardware sales to Europe reached 27% of the worldwide total, with Asia Pacific next with 12%. In 2000, In-Stat expects that the combined sales of Europe, Asia, and Latin America will total more than half of the worldwide market. These areas will face the same network expansion experienced in North America over the past three years.
The worldwide networking equipment market reached $9.35 billion in the third quarter of 1999, a 16% increase over the same period last year, resulting in a record quarter. In-Stat expects the networking market to end 1999 at $36.8 billion, an all-time high. Part of a new quarterly service, the Quarterly Networking Review analyzes technology and market trends impacting the overall networking hardware market.