Gartner Dataquest Alert
LAN Switch Price Cuts Fail to Boost Sales in EMEA
Most LAN switch vendors are complaining about weak sales in Europe, the Middle East and
Africa (EMEA). They believe market conditions have improved slightly in other regions, but
recovery in EMEA, especially in Europe, is still lagging behind. Shipments in EMEA had been
increasing since 3Q02, but fell 2.7 percent in 2Q03. Shipments in other regions were flat.
Vendors continued to lower their prices in most segments of the market, leading to a further fall
in end-user spending.
Preliminary results for 2Q03 indicate:
■
Port shipments reached 13.9 million, a drop of 2.7 percent over 1Q03. But they increased 27
percent compared with the same period in 2002.
■
End-user spending was $868.6 million, a decrease of 5.6 percent compared with the previous
quarter.
■
Layer 3 Gigabit Ethernet chassis switches were the best performers. Shipments increased 12.1
percent over 1Q03, while end-user spending was flat.
■
Cisco Systems remained the unchallenged market leader. It took 32.6 percent of shipments
and 63.1 percent of spending.
■
3Com had a tough quarter as its shipments in EMEA declined 23.7 percent.
■
Nortel Networks saw a slight improvement thanks to good sales of Gigabit switches.
■
Allied Telesyn took some market share away from 3Com and Netgear, cutting prices
dramatically to boost sales of its Layer 3 fixed Gigabit Ethernet switches. The average price of
such products has fallen 34 percent since 1Q03.
■
Shipments increased 29.8 percent in the Middle East and Africa. Lagging behind are Eastern
Europe, where shipments fell 0.2 percent, and Western Europe, with a decline of 4.9 percent.
Features like security, voice over IP and power over LAN may tempt buyers to upgrade, but
vendors are finding it tough to sell to their existing customers. IT budgets are still tight, and
managers must do more with less. The rollout of Gigabit Ethernet to the desktop is not
happening as fast as networking vendors would like, despite the significant cuts in price. The
LAN switch market in EMEA is likely to remain flat for the rest of 2003.
Table 1 shows the top eight vendors in the EMEA market. Figure 1 shows the market's
performance since 3Q01.
4 September 2003
©2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved.
1
LAN Switch Price Cuts Fail to Boost Sales in EMEA
Table 1
LAN Switch Port Shipments and End-User Spending by Vendor: EMEA, 2Q03
Port
Shipments
(K)
Vendor
Shipment
Share
End-User
Spending
($M)
Spending
Share
Change in
Shipments vs.
1Q03
Change in
Shipments vs.
2Q02
Cisco
4,519.0
32.6%
547.7
63.1%
-3.5%
9.5%
3Com
1,919.5
13.8%
61.5
7.1%
-23.7%
4.1%
Nortel Networks
458.6
3.3%
49.7
5.7%
4.4%
31.7%
Hewlett-Packard
1,181.7
8.5%
39.6
4.6%
2.4%
25.3%
Allied Telesyn
2,074.7
14.9%
34.9
4.0%
90.9%
178.4%
Extreme Networks
146.8
1.1%
25.0
2.9%
-18.8%
-12.4%
Enterasys
162.9
1.2%
22.4
2.6%
-12.0%
NA
Netgear
951.4
6.9%
16.5
1.9%
-28.4%
48.7%
Others
2,467.8
17.8%
71.4
8.2%
-8.4%
21.2%
Total
13,882.4
100.0%
868.6
100.0%
-2.7%
27.0%
NA = not applicable
Source: Gartner Dataquest (September 2003)
Figure 1
LAN Switch Port Shipments: EMEA, 3Q01-2Q03
Thousands of Ports
16,000
Western Europe
14,000
Eastern Europe
12,000
Middle East and
Africa
10,000
8,000
Total
6,000
4,000
2,000
0
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
117119-00-01
Source: Gartner Dataquest (September 2003)
By Severine Real
4 September 2003
©2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved.
2
LAN Switch Price Cuts Fail to Boost Sales in EMEA
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