IDC: Unexpected Dip For Australian Router Market
The router market declined 6.1 per cent from US$281 million in 2013 to US$265 million in 2014, with the IDC stating service buyers have been over-buying capacity in the last few years and have now reduced their purchasing as they wait for capacity to be filled.
IDC analyst Ahmar Karimullah stated initial indications pointed to open standards and the introduction of virtualised routers as being behind the dip in growth.
“Its been in the news for the last few years and we suspected SDN solutions had at last arrived in volume,” Karimullah stated. “Sadly, further investigation revealed another culprit – over-provisioned capacity.”
Karimullah noted that while virtualised routers are making a dent in the market, they still require software licensing and hardware to support their deployment.
“Virtualised routers have yet to make a dent on the high-end routers used by telecom service providers,” he commented.
“This part of the market still relies on equipment with specialised hardware designed for reliable, high-bandwidth, low-latency operations. Service providers have been buying capacity over the last few years and 2014 revealed some over-provisioning.”
The expectation is that revenues will recover as data requirements grow to exceed installed capacity.
Most vendors experienced declines except for market-leader Cisco, with a 32 per cent gain in revenues, with Cisco’s real growth coming from the 2014 third and fourth quarters, when it introduced its new ACI products in the market.
The IDC noted that the growth experienced by Cisco shows demand for products providing a unified view and control of network is high in the Australian market, stating vendors who cannot provide products with such capabilities may not be able to survive.
While the IDC expects that virtualised equipment such as routers will begin to be installed in lower demand locations like the edge of the network, it states its role as the dominant routing solution is still some years off.