Switch : Missing Ground

In today's increasingly complex business environment, the network is facing
new challenges. Applications and network infrastructure of switches that
transport them, are crucial tools for enhancing user productivity.

But this is a tough time for the switch industry. And shrinking market size
of this segment is a serious matter of concern for the major players in this
space. At present, when the whole equipment industry is hit by the economic
downturn, the switch segment is no exception.

According to VOICE&DATA estimates, the switch segment has managed a meager
1.5% growth with the total market size of Rs 2,350 crore in the FY 2008-09 as
compared to Rs 2,316 crore in the last fiscal. Though there was a 2% decline in
the revenue of Cisco for FY 2008-09, it still dominated the switch market with
72.5% market share and a total revenue of Rs 1,702 crore. D-Link occupied the
second position with a revenue of Rs 136 crore as compared to Rs 130 crore in FY
2007-08, a marginal growth of 4.6%.

3Com reported revenues of Rs 100 crore, registering a 5.5% growth over the
previous fiscal's Rs 94.8 crore. Another player, DAX, made Rs 29 crore in
revenues with a satisfactory growth of 9.8% and a market share of 1.3%.

Switching Trends

The switch market is looking at power over Ethernet as VoIP handsets and
other networked devices come to the market. IP communications, wireless and
collaborative applications, video, network, intelligence and optimization for
web 2.0 are some other market trends. Besides, IPv6-enabled switches, access
control by integrating the switch with dedicated anti-virus, IDS, IPS devices
and bandwidth bundling with multiple Internet links are some recent trends.

Gigabit Ethernet and layer switches too are expected to fuel demand in the
coming few years.

A positive and encouraging market trend is the increase in investments on
networking infrastructure. An increase at a normal pace is being witnessed, even
amidst the financial crisis. Also, green technology is pervading the networking
market as well, and a few vendors have launched green Ethernet switches to meet
their green goals. Some of the other market trends initiating growth in the
switch market are:

• Data Center/ Server Consolidation: Consolidation, virtualization and
  automation are some of the key innovations that enable efficient utilization
  of data center space, power, cooling and IT resources.
• Security in the Network: As networks are growing in complexity enterprises
  are looking at solutions that will allow them to integrate security in every
  aspect of their network.
• IP Communications: Enterprises have come to realize the value of VoIP
  given its inherent cost effectiveness, ease of deployment and management.
• Virtualization: Organizations are looking at virtualization in a big way
  as its benefits include savings in rack space, efficient resource allocation,
  reduction in maintenance costs, and lower total cost of ownership.
  

Hottest Technology

FY 2008-09 witnessed the addition of many new and innovative technologies in
the switch space. One of the most significant additions in Cisco's product
portfolio was the launch of the Cisco Nexus 7000 Series. The Nexus 7000 is a
scalable modular platform that delivers up to 15 terabits per second of
switching capacity in a single chassis.

In FY 2008-09, Juniper focused on the innovation of EX series switches which
enable new architectures that reduce cost and complexity. Unified management and
automation tools to consolidate system monitoring and maintenance save time and
money.

Another technology addition was Virtual Chassis technology currently
available on the EX4200 lines. It allows up to ten switches to be interconnected
and managed as a single, logical device.

For DAX Networks, POE support in unmanaged switches, SFP support in unmanaged
switches, 10G enabled L2 switches, switching with time based access list
multiple port combination switches, data acquisition and device management and
high performance delivery were some of the latest technology additions during FY
2008-09.

Another player, Extreme Networks added some new technologies like automation
framework, green networks, reliable networks and IPv6 adoption.

Major Contributors

On the technology front, increased adoption of collaborative technology,
unified communications, data centers and security solutions in India, and trends
like remote networking and enterprise focus on productivity improvement are
driving the growth.

IPTV applications and broadband Internet to home will drive the switch
industry. Investments in IT/ITeS space and outsourcing, commercial mid-market,
government IT infrastructure initiatives, telecom infrastructure upgradation,
data centers and VoIP security will also be key drivers. e-Governance as a part
of ICT initiatives is driving the demand for switches at kiosks. Consolidation
of branch offices, new data centers and increase in demand of bandwidth
applications are some of the other growth factors.

Besides, continued growth and transformation across all key verticals like
manufacturing, BFSI, retail, banking, infrastructure, IT/ITeS, government,
telecom, defense and BPOs are the major contributors to the switch market.

Key Achievements

Inspite of the economic downturn, FY 2008-09 was a year of achievements for
major players in the switch space. For Juniper, the major achievement was the
introduction of EX-Series of Ethernet switches, setting new benchmarks for high
performance network infrastructure in the enterprise.

Dax Networks bagged a major switching order in LAN connectivity for more than
7,000 village kiosks from the SREI Infrastructure project in various states. The
company also received some big orders from Navkar Computers, HQ Western Command,
ERNET India, Sher-e-Kashmir, and e-Gram Vishawagram Society.

Extreme Networks opened three sales offices to strengthen the channel route
and lay out a stronger alliance with major partners. It launched some very
efficient products in the market like BD20808 and Summit X650 series switches.

Outlook

Though the Indian switch market is feeling the heat of recession in terms of
revenue and growth, but the economic downturn also favors Carrier Ethernet
technologies and products as they are a less expensive alternative compared to
legacy equipments.

In the coming years, switching buys will move around 10/100/1000 to desktop.
Layer 3 standardization, embedded power over Ethernet in all switches will be
the standard buying criteria.

The high levels of connectivity, along with the convergence of voice and
data, and user enabled features will contribute highly to the switch industry
growth in the next couple of years.

Arpita Prem

arpitap@cybermedia.co.in