Cisco gains market share in routers: study

Cisco Systems Inc. gained share in global sales of routers in the third quarter, while the overall market grew with demand for high-speed Internet services, an industry report showed on Thursday.

The Dell’Oro Group quarterly survey on routers, which direct Internet traffic, showed that the total routers market grew to $2.47 billion in quarterly revenue from $2.36 billion in the second quarter, helped by growth in Web services like video and music downloads.

Cisco’s share of that market grew to 69.9 percent from 68.3 percent in the previous quarter, the report said. Juniper Networks remained a distant runner-up, but its share fell to 14.2 percent from 15.2 percent in the second quarter.

French equipment maker Alcatel’s market share rose to 5.1 percent from the previous quarter’s 4.5 percent.

“Cisco is by far the leader. They have a very large customer base that enables them to take advantage of overall market trend,” said Shin Umeda, an analyst at Dell’Oro Group.

He said phone and cable television carriers were upgrading their networks in response to increasing Internet use and the growing popularity of bandwidth-heavy services like video and music.

“The number of broadband subscribers worldwide is expanding by around 10 million subscribers every quarter,” he said. “Bandwidth per subscriber is also increasing as Internet users watch video and download music, and share information.”

Router sales to service providers such as telecoms, Internet and cable companies rose to $1.45 billion from the previous quarter’s $1.37 billion, while sales to other businesses grew to $1.01 billion from the second quarter’s $994 million.

Umeda expects the routers market will keep growing in coming years, largely due to similar Internet traffic trends and the introduction of Web-based television.

He forecast total routers revenues would total $9.7 billion in 2006 and rise to $10.8 billion in 2008, compared to $8.3 billion in 2005.

The Dell’Oro group said Cisco was also the top vendor of Ethernet switches, which direct local area network traffic, in the third quarter.

Cisco shares rose 2.1 percent to $27.15 on the Nasdaq on Thursday. They have risen around 59 percent since the start of the year on strong sales of its network equipment.