An aggressive vendor price war is driving down the price of switches and fuelling huge growth in Gigabit Ethernet, according to recent data from US researcher Dell'Oro.
The group's latest report, Shared Hubs & Lan Switches, showed that, quarter on quarter, Gigabit shipments grew by almost two-thirds.
The study said: "New products with higher port densities and copper media will mean lower prices and much higher volumes for Gigabit. By the end of the fourth quarter this year nearly 800,000 Gigabit ports could be shipping with prices as low as $600 (€580) per port."
Greg Collins, senior analyst at Dell'Oro, said: "Competition will definitely stretch to the Gigabit market. As volume ramps up, vendors will lower prices, this is especially true on copper products and reflects a higher demand for the technology."
Cisco has grabbed the majority of the Gigabit market with a share of 43 per cent. The analyst attributed this to the vendor's successful attempts to upgrade its installed base of Layer 2 100Mbps Ethernet modular switch customers.
Cabletron's revenue has also grown by nine per cent to almost $30 million, based on the strength of its Smartswitch Router, 100Mbps blades and Layer 2 Fixed Ethernet switch products.
Collins said: "Users want technology, but at the right price, the vendors have to comply with this."
ATM has been the victim of Gigabit's success. Even though ATM prices have been slashed, the overall market for the technology declined nine per cent to $220 million during the first quarter of this year.
Lower prices in all ATM areas were offset by the higher sales prices of more expensive 622Mbps and Wan interface ports. Prices for 155Mbps ports, which make up the bulk of the market, fell by almost 20 per cent.
Collins said: "Since Gigabit has shipped in volume, prices and demand for ATM have dropped, only applications requiring quality of service will use it in the future."
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