Cisco takes back share from HP in Ethernet switching market

Cisco (Nasdaq: CSCO) has continued to take back share in the Ethernet switching market, according to Infonetics Research's latest Ethernet Switches and Enterprise Routers market share report.

Within a market that saw a 5 percent sequential increase and a 3 percent year over year increase, Cisco was a star in the third quarter, despite having lost share in previous quarters due to toughening competition.

"In the third quarter of 2011, Cisco turned things around with a blowout quarter, showing that their internal reorganization and more aggressive stance are starting to pay off," said Matthias Machowinski, directing analyst for enterprise networks and video at Infonetics Research. "Cisco grew their overall Ethernet switch revenue 18 percent and captured 68 percent of the global market."

And, said Machowinski, its growth came with what had to be seen as an added benefit for the company that has been trading blows with fierce rival HP (NYSE: HPQ): Almost all of its 3 points of market share were at HP's expense.

"It's impossible to tell where things go from here, but at least for now, Cisco has changed the momentum," notes Machowinski.

Overall, sales of Ethernet switches were up 13 percent to $5 billion from the second quarter of the year, following a relatively weak performance in the first half of 2011.

Ports have been growing all along as demand for networking products continues, with 10G ports up 21 percent quarter-over-quarter and almost double the year-ago level, benefiting from data center upgrades, 10G server adoption, server virtualization and core network buildouts. The first half of the year had seen fierce competition cut into revenue growth in the first half of 2011.

Infonetics also said the 40G market emerged in the third quarter of 2011, with $6.5 million in global revenue, helping vendors stop a slide of the average selling prices of Ethernet switches. Over the past year, discounting had driven ASP down more than 20 percent. Cisco retained an eroding lead in revenue share, claiming 74.2 percent in the quarter, followed by HP and Juniper Networks (NYSE: JNPR). Cisco has lost almost 5 points of market share, HP is up 3 points, and Juniper is up less than 1 point

Also seeing a renewal in the quarter were enterprise router sales, which, with the help of a rebound in the sale of high-end routers, saw sales grow 5 percent quarter over quarter and up 3 percent year over year. Revenue in the market hit $888 million worldwide.

Cisco retained an eroding lead in revenue share, claiming 74.2 percent in the quarter, followed by HP and Juniper. Cisco has lost almost 5 points of market share, HP is up 3 points, and Juniper is up less than 1 point.

APAC, especially China, drove revenue growth in the quarter.

For more:
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