Carrier Routing, Switching Had Bang-Up 2011: Researcher

The market for carrier-grade routing and switching was somewhat soft in North America and the EMEA region last year, but growth spikes in Asia and Latin America -- and an ongoing carrier upgrade cycle -- propelled the overall segment to record numbers.

That's the latest from Infonetics Research, which pegged the overall carrier router and switch market at $14.5 billion for 2011, up 8 percent over 2010. Going by Infonetics' numbers, that makes carrier routing and switching the second largest global telecom market, following mobile radio access network infrastructure.

Michael Howard, Infonetics co-founder and principal analyst, said that increases in Asia and Latin America catalyzed the segment's overall growth.

"Paradoxically, 2011 results show signs of a slowdown in the market's overall growth rate. Why? Because despite continued double-digit percent annual growth in the largest market, Asia, and the smallest market, Latin America, the two mainstays of carrier routers and switches, North America and EMEA, are slowing," Howard said in a note to subscribers.

Still, said Howard, the growth of fixed broadband traffic and mobile broadband traffic on 3G and LTE networks is pushing many service providers into an upgrade cycle, touching everything from access and aggregation to mobile backhaul.

IP edge routers, IP core routers and carrier Ethernet switches together hit $3.9 billion in the last quarter of 2011, Infonetics said.

Cisco commands about one-third of the global IP edge market, although Infonetics noted that four of its major competitors there -- Alcatel-Lucent, Huawei, Juniper and ZTE -- gained market share in 2011. Alcatel-Lucent's gain was especially notable, Infonetics said, because it gained the No. 2 spot for global router revenue in the fourth quarter and kept the No. 2 spot for EMEA router revenue for all of 2011 despite not having a core router product.

North America posted a decline in carrier router and switch spending both quarter-over-quarter in 2011 and for the full year, Infonetics said -- the only world region to do so. Juniper was among major service provider vendors to feel the effects of that weakening spend, reporting lower-than-expected numbers for fourth-quarter 2011 and a tepid projection for its first quarter.

The sale of carrier infrastructure to service providers, particularly second-, third- and fourth-tier service providers, is a potentially lucrative play for solution providers. Several vendors have tweaked their channel programs in the past two years to turn more traditionally enterprise-focused VARs onto that sale, including Cisco, which recently debuted an Advanced IP Next-Generation specialization specific to partners selling into that market.