/vnd/media/agency_attachments/bGjnvN2ncYDdhj74yP9p.png)
/vnd/media/post_attachments/8336022b456a1c098ebd89969cdb2b13c038692b2957064fd1d14ecad952368b.gif)
alt="https://img-cdn.thepublive.com/filters:format(webp)/vnd/media/post_attachments/8336022b456a1c098ebd89969cdb2b13c038692b2957064fd1d14ecad952368b.gif (26399 bytes)"> |
/vnd/media/post_attachments/41c9893a300e8191ae1ebc7ec0486376da09db1f47d206985149fd301c885355.gif)
alt="https://img-cdn.thepublive.com/filters:format(webp)/vnd/media/post_attachments/41c9893a300e8191ae1ebc7ec0486376da09db1f47d206985149fd301c885355.gif (8136 bytes)"> |
The total networking market in
India is valued at approximately Rs 750 crore, including the products not taken for
ranking purposes in our survey. That is just one-fiftieth of the total global market of
$31.5 billion, estimated by the analyst firm, Cahners In-Stat Group. Indian market is
always one whose potential is discussed more and as a rule, the time taken to tap that
potential is always more than estimated. Networking market was no exception. But this
year, it was a bit different. Despite the recession, the market for the first time posted
a growth of over 50 percent.
The Indian networking market is
still in its infancy. It is only five years old. Yet, one can clearly identify trends that
are comparable to global networking trends. The IT business is now synonymous with
networking, as compared to computers, five years back. Networking is no more a niche. It
is mainstream. Low-end product markets like NICs and hubs have become commoditized with a
large number of players. Switches, routers, and structured cabling are in their early
growth phase. They cannot yet be termed legacy in any case.
The network has become faster,
more compact, and versatile, capable of handling giga speeds. It can comfortably transport
video, music, and voice in addition to data and can work well with different media, be it
copper cables, fibre-optic cables, or wireless. And importantly, it is much more cheaper
to instal today.
The escalation of switch share in
the total network cost shows that speed and bandwidth are the two most important
considerations of network deployers. Functionality is another significant aspect with
buyers demanding better value for money. Cheap may not always have been the deciding
factor last year. Otherwise, with hubs getting cheaper, the hub share would not be
shrinking every year.
The increase in router share
points to the fact that networks are communicating with each other more often. The edge of
today’s networks is that all have network products interfacing with the leased line
link, VSAT link, or the dial-up lines.
Â
| The Top Brands |
|
| Revenue (Rs Crore) | |
| D-Link | 24.80 |
| Compex | 20.35 |
| 3Com | 9.10 |
| Intel | 6.75 |
| Accton | 5.27 |
NIC There was a stagnancy in the
NIC market. Though volume shipments held its own, falling prices ensured a drop in the
value realized out of NICs. And the NIC market in India settled at Rs 82 crore.
NIC’s share in the
traditional network in terms of value dropped to 15 percent from a 25 percent share in the
previous fiscal. A good number of the large LAN cases that happened during last fiscal
were backbone cases, and not replacement of products at the desktop levels.
The NIC market was largely
driven by distribution. Except for a few direct deals with SIs, NICs were mostly sourced
from distributors and resellers. This is the reason why the players with good distribution
did well last year. D-Link was the market leader with a market share of around 30 percent.
Compex did a shade less garnering a market share of 25 percent.
The good market share enjoyed
by these players point to the fact that Ethernet cards were predominant at the desktop.
Fast Ethernet remained mostly at the server end of the network.
The price of NIC varied
according to the brands. On the lower side, there were NICs which cost just a couple of
hundred rupees. On the other hand, there were NICs at the higher-end coming at Rs 1,200.
The average unit price of a NIC during last fiscal was approximately Rs 700. The average
price drop in NICs last year was about 8 percent.
Prices played a dominating role
in composition of percentage shares. This was one of the significant reasons for the lower
percentage share of brands like 3Com and Intel. 3Com could capture only 11 percent market
share whileIntel garnered about 8 percent share of the pie.
The effect of the grey market
was visible on the NIC market. The chances of buyers going in for a not-so known brand was
much more evident in the NIC segment than any other active device.
"NIC on the
motherboard" concept is still new in India and will take time to be accepted. These
products depend on the growth of PC population and real network deployment. With a million
PCs expected to ship in the current year, the chances are that a fair amount of them will
be networked. Even otherwise, there is a large number of PCs yet to be connected. The
replacement market and the SME segment are the two factors on which growth of NICs will
depend on.
Â
| The Top Brands |
|
| Revenue (Rs Crore) | |
| 3Com | 20.37 |
| D-Link | 17.30 |
| Nortel | 11.30 |
| Compex | 8.07 |
| Accton | 2.81 |
Hub Contrary to all hype about
switches, the hub is not dead at all. It has just gone mainstream. It is now a product
that has to be taken as soon as you want to network. A server, desktops, NICs, and a hub
constitute the bare essential network these days.
The total hub market registered
a growth of 21 percent during last fiscal. A much improved performance, considering the
previous year’s negative growth. The market for hubs stood at Rs 70 crore.
The switch companies would like
to give the hint that hubs would all be replaced by switches, and that there is no use
playing in the hub market–that they are getting out of the hub market. Yes, switches
did replace hubs. The new network deployments were mostly switch purchases. However, a
large number of workgroups throughout the country still went in for hubs. Small offices,
bank branches, etc., did not yet feel the need to replace their workgroup hubs with
switches.
The erstwhile leaders in hubs
like Bay Networks and UB Networks were marginalized. Bay Networks, which has now become a
line of business in Nortel Networks, is actually thinking of totally getting off the hub
business. While UB Networks, after getting acquired by Newbridge, is heard no more. The
traditional companies felt the pinch of too many competitors with stiff price competition
from them. Even more than that, it was too risky for them to play in a volume market.
However, there was the danger
of getting carried away by price drops. Companies had a risk of shooting themselves on
their foot by going too far down the value game. It was a difficult game to play down
there. Not many companies were happy with the margins that they were able to get from
their sales.
In this market space, it was
important to cut cost but at the same time retain the brand equity of being a top
networking company. This was what market leader 3Com exactly did. It dropped prices
substantially but not to the extent of the Taiwanese and the bottom-end products. The sole
world-known brand still active in the hub market during last year, 3Com did a business of
Rs 20.37 crore, enjoying 29 percent market share.
D-Link did well to take the
second position in hub sales with about 25 percent market share.
Hub ports shipment grew at much
faster rate in volume. However, dropping prices affected the revenues accrued from hub
sales. The average 24-port Ethernet hub cost about Rs 28,000, against almost Rs 35,000 in
the previous year. The 4-port low-end varieties, Taiwanese hubs, etc., came much cheaper
at as less as Rs 2,000.
In the days of Internet and
multimedia, the hub will undergo many changes to adapt to a new environment. Managed hubs
will be the option rather than unmanaged hubs, due to the former’s remote
manageability. There will be more built-in management functionalities, ability to handle
various media, and obviously faster operation.
The outlook for hubs is good.
Enterprise-wide cases will replace hubs or go in for switches straight away. But, there is
a large space still to play with. Large number of SMEs do not still think of switches. And
the even smaller workgroups do not yet see the need for switches. However, the dropping
price of switches is a worry to hubs. If switches are coming at the same price as hubs,
customers may prefer switches. Anyway, hubs will have to compete hard to stay as an
important component of the network. These probably will have to imbibe some switching
abilities to survive. Already, the switching hubs are an indication towards this
direction.
Â
| The Top Brands |
|
| Revenue (Rs Crore) | |
| Cisco | 59.30 |
| Cabletron | 48.50 |
| Nortel | 22.90 |
| 3Com | 22.66 |
| Newbridge | 17.50 |
Enterprise Switch
-
Another great year for
switches, the switching market grew by 156 percent to an estimated total revenue of Rs 205
crore. The market had more than 20 players competing against each other. The Ethernet
switches being already popular, ATM and Frame Relay switches were active too. The Campus
LANs were active as ever. -
Switches are the direction for
the future and are gaining importance world-wide and also in India. These contributed
around 37 percent of the traditional networking market in India. -
The switch continues its price
attack on hubs. Prices of low-end switches are now equivalent to that of the hub.
Medium-end hubs especially felt the pinch. The gap between hubs and switch prices has
drastically dropped. An average 24 port Ethernet hub and a 24 port Ethernet switch cost Rs
28,000 and Rs 48,000, respectively. The above switch is a recognized brand. There are
several other lesser-known brands which come at much cheaper price. -
On the upper-side of the
market, another pitched battle was unfolding. The battle for the campus. New Gigabit
Ethernet switches have fast scaled up and are now intensely competing with ATM switches.
This is going to be an area to watch. -
On the high end, hubs are being
replaced by switches where the nodes are many and the levels of convergence are high. The
indication is that the backbone is largely a switch dominant area, while hubs move nearer
to the desktop. Almost all the enterprise deployments were switches, while the SME segment
was divided between the switch and the hub. While the new deployers among the SME went in
for switches straight away, the ones that are on the old network, are still OK with their
hubs. -
Applications like ERP,
intranet, videoconferencing, and voice over IP were hottest among the large organizations
which felt an urgent need to cut organizational costs. Hence, one can see large
multi-media backbones being installed all over the place. ATM, which is being considered
the protocol for a multimedia world, was a hot favourite among campuses. The two segments
which are seeing ATM and Frame Relay with great enthusiasm are manufacturing and
education/research. The defence sector was another significant buyer. It had installed one
of the biggest ATM networks in the country last year. Fore and Newbridge did well in the
ATM and Frame Relay switch market. -
The hot favourite among
Ethernet switches during last fiscal was Cisco. The router monopolist is also becoming a
switch leader. For the second consecutive year, Cisco has had a great switch year. The #1
networking company in India clinched around 29 percent of the market, with a switch sales
of Rs 59.30 crore. -
Cabletron came out a strong
second with a market share of around 24 percent. It is completely focused on switches.
From switch sales alone, the company did a business of Rs 48 crore out of its total
revenue of Rs 52 crore. -
The opening of WAN market paves
the way for large-scale deployment of powerful and versatile switches. Scalable solutions
involving modular products will be hot favourite. Large chassis switches and modular
switches will get installed in backbones, and the consequent purchases will be only for
the chassis and modules that the deployer can keep adding.
Â
| The Top Brands |
|
| Revenue (Rs Crore) | |
| Cisco | 74.13 |
| Motorola ISG | 7.02 |
| Nortel | 5.31 |
| Tata IBM | 3.48 |
| 3Com | 2.55 |
Router A premium networking segment,
the routers segment recorded 80 percent growth in its sales revenues. The total market for
router stood at Rs 99.27 crore. It accounted for about 16 percent of the traditional
networking market.
The consumption of routers was
more divided last year than ever. The reason for this was that the carrier market for
routers contributed much more business than ever. This time out of the total Rs 99 crore,
at least a fourth of it was due to the ISP phenomenon.
The big ISPs like VSNL, Satyam
Infoway, ETH Dishnet, and MTNL spent considerable amount of money on routers for their
central ISP nodes.
However, the enterprise market
was the one which brought in the moolah. Router was inevitable in connecting the
enterprise offices by either leased lines or a VSAT link. Some of the biggest buyers of
routers also were big telcos like MTNL and VSNL which provided the leased lines to the
enterprises.
Cisco’s market share
dropped from 80 percent to 74 percent last year. This was attributed to the fact that some
of its immediate competitors also had a few successes this year. Companies like Nortel and
3Com pulled some important victories at previous domains of Cisco. The year started with
3Com winning a significant Rs 2 crore router deal with MTNL. Nortel also won the router
deal for the Bharti BT Internet project. These are deals in which Cisco competed. However,
towards the end of the year, in both places, Cisco is learnt to have retained its base.
Next to Cisco was Motorola in
the second spot for router market, with a market share of around 7 percent. This is in
spite of the fact that Motorola was not even clearly present in the market prior to the
third quarter. The credit goes to Convergent Communications, its authorized dealer in
India, for making a good performance for the company.
Cost of router varied from
$1,500 to $20,000 depending upon the configuration one chose from say, base low/tier1,
base low/tier2, base low/tier 3 (premium), mid range and high range. Growth was more in
premium and mid-range segments as these contributed 30 percent of the total market.
The router space is, however,
getting slowly populated. Last year, there were more than 13 players in the field.
Maintaining a major lead will increasingly become tough for Cisco, due to intense
competition from rival router brands as well as Layer 3 switches, which has routing
features as well.
Beginning this year, prices of
leased lines have dropped drastically–in most cases, more than half. This is likely
to have a positive effect on WAN deployments. This bodes well for router sales.
Also a number of backbone
projects of the carrier kinds are due this year, important ones being the NIB phase-I and
phase-II projects, the Railways backbone, and also the backbone of PGCIL. A large number
of routers are bound to go into such projects. All in all, router has another great year
ahead.
Â
| The Top Brands |
|
| Revenue (Rs Crore) | |
| Lucent Technologies | 40.0 |
| AMP | 25.0 |
| BICC Brand-Rex | 9.0 |
| Molex | 7.5 |
| Krone Communications | 4.38 |
Structured Cabling In 1998-99, the structured
cabling market in India was estimated at Rs 96.45 crore.
The top three players in the
Indian market are Lucent with a market share of 41 percent; AMP with a market share of 26
percent; and BICC with a market share of 9 percent. Lucent which had a monopoly in the
last two years with a 70 percent market share is losing its share to new entrants coming
in the field. AMP has consolidated its position and BICC is getting into the Lucent pie.
Siemon’s share has gone down because HCL its channel partner has lost its focus in
the structured cabling segment.
The market is flooded with
structured cabling players numbering around 15. But these players have, in turn, helped in
educating the users about the latest products, resulting in the customers demanding more.
Also, as there are so many vendors, users do have a wide range of choice to choose from.
D-Link, Delta Full, and TVSnet
are the new entrants in the structured cabling market.
On the technology front,
Category 3 is non-existent, Category 5 is on a decline. Customers are switching to
enhanced Category 5 and Category 6 cabling. Enhanced Category 5 has become a default
standard in large projects whereas Category 5 is for the price-sensitive projects.
Category 6 standard is yet to be developed.
In terms of medium, copper
still remains the king in the LAN medium, but fibre will replace copper in the backbone
part of the network.
Single-mode fibre is more in
demand in comparison to multi-mode fibre. Fibre in the backbone and copper in the desktop
is the new trend. Still one has to go a long way for realizing the dream of fibre to the
desk.
Technology trends are towards
modularity and flexibility in component design.
The major drivers of the market
will be ERP, Internet, intranet, and Y2K. Emerging segments are software houses, MNCs,
SME, government, defence, and financial market. The SME segment is gaining wide
acceptability, so structured cabling companies have to shift their focus to B-class
cities.
Earlier, the market was limited
to top 500 corporate houses. Now, it has percolated up to the top 1,000 corporate houses.
In the financial sector, banks
and insurance companies will go in a major way for structured cabling solutions. Growth
was dominant in the banking sector as it went for computerization in a big way.
Educational institutions, software technology parks, and large manufacturing companies
were the other segments where a lot of growth in structured cabling was seen. There was a
good growth in the petrochemicals sector and companies like Petronet LNG, BPCL, HPCL, and
Reliance went for it in a big way.
The South and the West markets
are technology sensitive, North is price sensitive, and the East market has started to
pick up.
The top two structured cabling
orders were the Rs 3.5 crore Haldia Petrochemicals order and Rs 2.5 crore Telco order for
its Pune location.