Switch: Standstill!

The Indian switch market has transformed significantly with a wide adoption of world class IT networks across all verticals. It has matured and the criterion for buying and operation has changed dramatically. Intelligent switches have enabled companies to realize the full benefits of adding intelligent services on to their networks. The availability of 3G and high speed broadband also empowered the SMBs and enterprises to go for more intelligent and futuristic devices that can take on multiple tasks like 3G, 4G, UTM, switching, and routing. However the infrastructure market did not see much growth in terms of minting money.

The market has been abuzz about gigabit for some years now. But last year they became more relevant with the rising trend of storing data on network drives and SANs and with the continuous increase of high bandwidth applications in organizations. This availability of new technologies by enterprises held promise for vendors who were being squeezed for margins in their volumes business of unmanaged layer-2 and -3 switches.

Market Dynamics

Ethernet remained driven by its lower cost and ease of administration. Both metro Ethernet and ADSL were largely driving the business last fiscal. Telecom service providers rolling out ADSL networks continued buying the large 10G and IG over Ethernet switches for their broadband deployments. The real push in terms of volumes in the enterprise switching business will come with greater roll out of metro Ethernet networks.

Large enterprises and service providers increased the demand for managed gigabit switches. They are planning to roll out bandwidth intensive enterprise applications such as data warehousing, with the growing importance of video traffic on internet and enterprise networks. Some of the other drivers of growth were applications such as streaming video, voice-over IP, high-end multimedia, medical imaging, and other bandwidth intensive applications. All these applications threw up demand for gigabit and fast Ethernet switches in low volumes but high value.

The importance of gigabit Ethernet continued to increase in the backbone networks and at the server level. It was still early days for gigabit switches at the node level, however the fast Ethernet switches became entrenched with the end users. The 10/100 Mbps ports were routinely bundled with the end nodes.

In the data switching market, major revenue is generated from government, retail/wholesale, manufacturing, services, financial, education, and energy verticals apart from the other verticals like healthcare, telecom access, etc. It is the most mature amongst all of the IT infrastructure market in enterprise, SME & SOHO segments and is one of the long-lasting data networks revenue stream.

Most of the vendors are more focused on consolidating integrated data networks by implementing infra projects like R-APDRP, India-NET , RailNET, UID-Aadhar, etc.

Last year, the switching market focused more on consolidating solutions mainly in enterprise campus core, campus edge, NeGP pan-India connectivity, data centres and industrial data automation. This, in-turn, guided most of the switching vendors like 'DIGISOL' to focus on consolidated data communication network for integrating applications.

From the government of India perspective, DIT-GoI put more thrust on integrated e-gov applications, common data model for government, and to enable 'paper less' offices.

The market saw a clear segmentation in terms of 2 types of customers. Those looking for managed layer 4-7 switches, and those graduating from hubs and still did not have very complex requirements. At the higher end of the market, with the continuous increase of manpower in the software companies, demand for switching increased. These companies are already entrenched into the culture of working in a networked environment, and all the new employees have to be connected with high-speed switches to the network's resources.

Vendor Dynamics

Dax' revenue did not see much growth and remained flat during FY12. However its bottom line was up compared to the previous fiscal. Verticals like BFSI, telecom, and e-gov witnessed maximum growth in the last fiscal. The contracts it got from Maharashtra horizontal connectivity, Tamil Nadu hospital project, and Directorate of technical education contributed maximum to it.

Last fiscal has been an eventful year for DIGISOL. The company emerged as a strong player in the data switching market in India due to its end-to-end solution offering and got major wins in government and BFSI segment.

It also bagged major projects from BFSI customers like SBI, UCO, HDFC, etc., OFB, Mhow, Kingfisher Villa, Vedanta, UPSC, Allahabad nagar nigam, Aadhar projects, Sarva shiksha abhiyan (SSA) for Gujarat, Karnataka etc, Indian railways, Indian army, DGS&D, educational institutes and university under NKN, Airport automation projects, BIOCON, Netmagic, Syntel, state govt rate contracts like Maharashtra RC and other major NeGP MMP projects.

The coming years, it appears, would be more interesting and aggressive with video becoming the major data consumption item for enterprises, SMBs, and SMEs. Verticals like IT services, BFSI, and public sector are expected to bring more momentum to the industry.