Networking

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It was an

excellent year for the enterprise networking industry. Fuelled by a rapid spread of

activities among the carriers, the networking industry grew 92 percent in fiscal 1998-99.

The total market for enterprise hubs, NICs, switches (both enterprise and carrier),

routers, and Remote Access Servers (RAS) was Rs 537 crore.

The main propellers of this

growth were the government’s attention on IT and telecom infrastructure, the

introduction of private ISPs, and a realization of the cruciality of a network. All

these combined together to make 1998-99 a good year for sales of networking products,

despite the hype about economic recession and the consumer’s cash crunch.

alt="segment1.gif (13164 bytes)" hspace="4" vspace="4" align="left"> face="Times New Roman" size="2">Cisco emerged as the number one networking company with

revenues of Rs 148 crore. An incredible performance by the market leader. Its networking

revenue was more than the combined revenues of the following two ranks on the basis of

sales revenue. Cisco grabbed the top spot in all three product segments in which it

completes–routers, switches, and RAS. 3Com’s momentum was back as a new team was

successfully regrouped. It retained the number two position. Bay Networks emerged stronger

after being renamed Nortel Networks. It did real good work in the last quarter and almost

caught up with 3Com. Nortel was placed third. Cabletron Systems as usual managed to endear

itself to its loyal customers and won praises for its robust and fast switches.

Cabletron was able to pick up the number four spot. D-Link was fifth in position.

Business trends

• Networking has become a mainstream industry. It is
  
  the fastest growing among communication equipment businesses today. And it clearly
  
  outpaced the overall domestic IT industry during last fiscal.
• An improved telco network contributed much to the
  
  success of the networking industry. And the coming of private ISPs brought in the
  
  much-awaited cash from carrier equipment like routers and RAS.
• The final quarter brought in a huge amount of
  
  business to the networking vendors last year. JFM was the star quarter that brought the
  
  cheers. 40 percent of the total business during last fiscal was done during this quarter.
  
  Router and RAS sales peaked like never before during this time frame when ISPs laid their
  
  networks across the country.
• Networking products came better and also cheaper.
  
  Prices of products dropped by about 15 percent across the board, while the low-end
  
  products were hard pressed to include features that were in higher-end products. This
  
  phenomenon was seen in the Taiwanese NIC and hub categories.
• During OND quarter Customs notification came
  
  shifting various products into the Special Import Licence (SIL) category, thus, increasing
  
  the Counter Vailing Duty (CVD) on these items. However, this did not deter networking
  
  products to be shipped into the country in large volumes. The customs duty applicable to
  
  networking products during fiscal 1998-99 varied from 40 percent to about 60 percent of
  
  CIF. This is excluding the SIL charges. The average customs duty on networking products
  
  works out to 55 percent of CIF. Which meant that after adding the margins to distributors,
  
  every dollar shipment of products was equivalent to approximately Rs 70 of shipments.
• Region-wise, West was the most productive with a
  
  markeshare of 38 percent. South and North followed with 35 percent and 21 percent
  
  respectively. East is still slow in terms of deployment.
• The buying decisions and contracts of the year
  
  reveal that manufacturing and telecom were the two most lucrative customer segments.
  
  Together they accounted for 50 percent of the total number of orders placed.

contd.>>>>

color="#000000">NIC
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The Top Brands
	Revenue (Rs Crore)
D-Link	24.80
Compex	20.35
3Com	9.10
Intel	6.75
Accton	5.27
Hub
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The Top Brands
	Revenue (Rs Crore)
3Com	20.37
D-Link	17.30
Nortel	11.30
Compex	8.07
Accton	2.81
Enterprise Switch
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The Top Brands
	Revenue (Rs Crore)
Cisco	59.30
Cabletron	48.50
Nortel	22.90
3Com	22.66
Newbridge	17.50