Q1 report: Cisco continues to lose switching share

A new study says Cisco (NASDAQ:CSCO) struggled in the first quarter in one of its key markets, Ethernet switching, losing more market share to Hewlett-Packard (NYSE:HPQ) and Juniper Networks.

The study, run by Canalsys, said Cisco wasn't the only one who suffered, as the quarter was tough on all vendors with revenue declining 8.8 percent from a year ago, primarily because, Canalsys said, public sector demand was down and prot-pricing competition was more aggressive.

"If current trends continue, vendors and channel partners will have to sell more volume than expected to reach revenue targets," Canalsys Director of Enterprise Service Mathew Ball said. "This competition could trigger a wave of merger and acquisition activity among smaller switch vendors as they try to gain economies of scale."

Canalsys said Ciscos' share of the market dropped nearly five percent from a year ago to 68.2 percent, a tough pill to swallow as the company sees nearly half of its annual revenue from its core switching and routing business.

Other notes from the report:

• HP Networking was gaining ground, partly due to its 2010 acquisition of 3Com, and had 14.1 percent of the market in the quarter.
• Juniper also gained share, growing 22 percent from a year ago to hold 2.4 percent of the market.
• Brocade and D-Link, were nest in line with an additional 11.5 percent of the market spread out among other vendors.

"Cisco is facing intense pressure on both its core switch and overall enterprise networking business," Ball said.

For more:
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