Network market to hit $50bn

The market for networking kit is set to grow to $50bn (£32.84bn) by the end of this year, according to analysts.

The worldwide networking equipment market reached $10.8bn in Q1 2000 - a three per cent increase from the previous quarter, according to a report published by Cahners In-Stat Group.

The report says that although revenue growth in the first of 2000 fell short of the 13 per cent growth of Q4 1999, this was typical for first quarter figures. Gemma Paulo, research analyst for In-Stat's voice and data service, said: "Although growth slowed in Q1 2000, the networking equipment market will pick up steam in the remaining quarters of 2000, fuelled by enterprise backbone purchases and continued service provider network build out."

In-Stat believes the networking equipment market will hit year-end total revenues of $50bn.

Research analyst at Xephon, Mark Lilleycrop, agreed that the first quarter was usually slow, but said this year had been especially bad.

"There's not just been slow growth, but also additional factors such as clearing up after Y2K. But we should see significant increases in the other quarters," he said.

In-Stat claimed that with the exception of high-end switches, Lan equipment markets are suffering from rapid price erosion. Paulo said that this has forced top vendors to push into the lucrative Wan equipment markets, where they are targeting service providers.

However, Lilleycrop warned that there wouldn't be unlimited opportunities in this area. "A lot of vendors are looking to the service provider market to boost falling profits elsewhere, but service providers will only grow as fast as the market will allow," he said.

The report found that the market's growth in the last quarter was mainly driven by Wan equipment. A higher than expected seven per cent growth in ATM switches was attributed to the rapid deployment of Broadband services, VoIP and network convergence.