Just how big is the worldwide LAN market today? We give you the breakdown on growth for hubs and switches, routers, and network interface cards

February  1997

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Boston (02/05/97) -- Users worldwide spent more than US$15 billion on LAN equipment last year, with LAN switching, Fast Ethernet, and other new higher-speed technologies a major draw, according to International Data Corp.

The overall market grew more than 20 percent, from $12.5 billion in 1995 to more than $15.2 billion in 1996. Traditional markets, such as shared-media hubs, eroded last year, as customers moved to LAN switching. Over the coming year, IDC expects the growth of newer technologies to continue, as more customers use multilayer switching, as well as Fast Ethernet, Asynchronous Transfer Mode (ATM), and Gigabit Ethernet products.

"1997 is really the year that all of these technologies are going to be growing pretty substantially," said Esmeralda Silva, senior analyst at IDC.

The following is IDC worldwide market data on several product areas:

• Hubs and Switches: This market grew to more than $6.4 billion last year, with port shipments growing to more than 60 million. The biggest growth area was in the $2.5 billion LAN switching market, where shipments increased from 2.2 million in 1995 to an estimated 8 million-plus in 1996. Prices have dropped, with average pricing for 10-megabit-per-second (bps) switches falling under $250 per port, and enterprise and data center switches below $450 per port.

  Chassis-based Ethernet hub sales have declined, although they still account for $900 million in sales. In the coming year, customers are expected to migrate from shared media systems to a LAN switching architecture.

  Stackable Ethernet hub shipments grew to 23.9 million ports and $1.2 billion in sales. Unmanaged Ethernet hub shipments also grew to more than 14 million ports, but they only brought in $213 million in sales; per port pricing has dropped to under $15 per port from some vendors.

  Token Ring shipments dropped from 5.4 million ports in 1995 to 5.2 million ports in 1996. Sales are expected to continue to the installed base, but those customers are also looking at migrating to LAN switching and ATM.

  Fast Ethernet hub shipments grew nearly five times, from 232,000 ports in 1995 to more than 1.3 million ports in 1996. FDDI concentrator shipments grew 33 percent, to 384,000.

• ATM (LAN) Switches: Shipments grew 350 percent to over 300,000 ports, up from 67,000 ports shipped in 1995. The entrance of Cisco Systems Inc. and 3Com Corp. to the market, as well as the growth of ATM uplinks on high-end LAN switches, led to the growth; a number of customers have also moved from ATM pilots to full rollouts. Desktop adoption of ATM, however, may be slowed by the growth of less-expensive technologies, including desktop switches and Fast Ethernet.

• Routers: Shipments of routers grew more than 60 percent last year, to nearly 900,000 units, largely due to growing use of the Internet and corporate intranets. Sales grew more slowly, reaching an estimated $4.8 billion in 1996, up from $3.7 billion in 1995. Small sites increased purchases of low-end routers, and ISPs drove sales of high-end routers. Even so, in the intranet market, there are a growing number alternatives to routers, such as ATM and frame relay switches.

  Cisco remains on top of the router market, with 55 percent of shipments and 65 percent of revenues. Cisco is followed by Bay Networks Inc. and 3Com.

  Direct sales made up 27 percent of shipments, a 1-point increase over 1995. VARs and resellers made 53 percent of shipments, down from 57 percent in 1995. Distributors made 17 percent of shipments, up from 14 percent in 1995. Original equipment manufacturers made up 4 percent of shipments, up from 3 percent in 1995.

• Network Interface Cards (NICs): NIC sales grew slightly last year to $4 billion, while showing a 24 percent increase in shipments, to about 37 million units. The 10-megabit-per-second Ethernet market grew 19 percent, to 28 million units. Shipments of cards with high-speed capability grew strongly, rising to 5 million units, four times the amount shipped in 1995; that includes 4.5 million 10/100-megabit-per-second Fast Ethernet cards. Fast Ethernet NIC prices did not fall as quickly last year as they did in 1995, holding in the $110 to $120 range.

  PC Card NIC shipments amounted to nearly 1.6 million units during the first half of last year, nearly double the number of shipments in the first half of 1995; multifunction cards showed strong growth, and total PC Card NIC shipments will likely be more than 3.7 million units. Network-ready (Ethernet on motherboard) PC shipments grew to about 5 million units, up from 4 million last year, and for now, do not seem to be an immediate threat to NIC shipments. Meanwhile, NICs are being installed on more and more servers and desktop PCs during the final assembly.

--Sari Kalin

Resources

• International Data Corp.
  http://www.idcresearch.com

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