L2-L3 ETHERNET SWITCH MARKET HIT $11.6B IN 2003.

Demand for 1G fixed configuration and 1G and 10G chassis switches was strong in 4Q03, but not strong enough to keep worldwide revenue for layer 2-3 Ethernet switches from dipping 1% from 3Q03 to 4Q03, according to Infonetics Research's quarterly market share and forecast service, L2-L3 Ethernet Switches. The decline was due to sagging sales of 100M fixed and chassis switches.

Despite flat revenue numbers this quarter, worldwide L2-L3 Ethernet switch revenue topped $11.6 billion in 2003 and is projected to grow to $14.2 billion in 2007. Vendors report that end-users are starting to increase their spending on network infrastructure at modest levels, which will drive 28% port and 11% revenue growth in 2004.

"The big story this quarter is how dramatically Cisco reclaimed the lead in the 10G chassis segment by creating a higher density blade and slashing the price per port," said Infonetics Research's Neil Osipuk, lead analyst of the report.

"After experiencing two quarters of revenue and port market share decline and losing the lead in the 10G chassis segment to Foundry, Cisco increased its revenue market share from 39% in 3Q03 to 50% in 4Q03, and their port market share from 40% to 77% . A diversified company like Cisco can afford to make lower margins in emerging areas like 10G, so the battle is really just beginning for the more specialized companies like Foundry. But regardless of who takes top position in this market, lower prices will certainly help boost adoption for 10G technology."

4Q03 Market Highlights

-- Cisco is the worldwide leader in the L2-L3 Ethernet switch market, with 59% revenue market share and 35% port market share (a slight decrease from their 3Q03 levels) -- HP has second place in revenue market share with 9%, while NETGEAR maintains second place for port shipments at 14%, just ahead of 3Com's 13% port market share -- 10G chassis switch revenue grew the most, 63% from 3Q03 to 4Q03, with Cisco and Foundry in the top two revenue market share positions -- 10G (fixed configuration and chassis) has the highest forecasted revenue growth between 2003 and 2007 across all regions -- 1G fixed configuration switch revenue grew 17% from 3Q03 to 4Q03, and is projected to grow 61% between 2003 and 2007, from $1.5 billion to $2.4 billion

L2-L3 Ethernet Switches tracks fixed configuration switches and chassis switches; each is broken out by 10G, 1G, and 100M switches. Forecasts are updated quarterly and cover all regions (worldwide, North America, EMEA, Asia Pacific, and CALA). Companies tracked in this service include 3Com, Alcatel, Avaya, Allied Telesyn, Cisco, D-Link, Enterasys, Extreme, Foundry, Force10, HP, NETGEAR, Nortel, SMC, and others.

For the table of contents, log on to Infonetics Research's Information Portal and download it at http://www.info.infonetics.com or call 408/298-7999 x225.

Infonetics Research is an international market research and consulting firm covering the data networking and telecommunications industries in North America, Europe, and Asia. Infonetics helps companies develop, market, and sell products and services by providing objective analysis of end-users, service providers, and product manufacturers. Infonetics has offices in Silicon Valley, the Boston Metro Area, and London.

Infonetics Research can be found on the World Wide Web at http://www.infonetics.com/.

For more information, call 408/298-7999, ext. 227.