InformationWeek

Growth Slowing

By Monua Janah

rice cuts are starting to erode the stellar growth of the LAN switch market. Sales in the fir st quarter slipped 4% from the fourth quarter of 1996 to $2.44 billion, according to the Dell'Oro Group, a market-research firm. Sales of hubs were down 10% to $1.02 billion. Ethernet switching was the only area that managed any gain, up 4% to $1.19 billion.

In addition, the Dell'Oro Group, in Portola Valley, Calif., revised downward its 1997 forecast for Ethernet switch sales, to $6.2 billion from its previous estimate of $7.3 billion. "Our projection for port shipments remains unchanged, as most of the reduction is attributed to price erosion," the report says. Still, the $6.2 billion figure represents a 75% jump from the 1996 total of $3.53 billion.

In-Stat, a Scottsdale, Ariz., market-research company, offers a slightly higher forecast for 1997 Ethernet switch sales: $6.8 billion. "We see consistent 30% growth in unit shipments, quarter on quarter, for the rest of 1997," says Diane Myers, an In- Stat analyst.

The two firms diverge in their ranking of the market leaders for ATM LAN switches. Dell'Oro says that first-quarter unit shipments in this market segment fell 7% from the previous quarter to 91,700 ports. The big surprise is that Bay Networks Inc.'s shipments jumped 38% to 18,000 ports, putting it a close second behind Fore Systems Inc., with 19,500. Cisco Systems Inc. is third, with 12,200 units shipped.

In-Stat estimates that 77,870 units shipped in the first quarter, with Fore accounting for 24% of the segment, Cisco 22%, and Bay 15%. Myers attributes the discrepancy to the fact that In-Stat doesn't count some ports that she defines as "uplinks" for Ethernet switches as ATM ports.

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