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Communications & Networks

  Metro Ethernet and FTTH Drive China's Ethernet Switch Market in 1H08  
September 12, 2008

China's Ethernet switch market maintained stable development and reached 4.49 billion Yuan in 1H 2008, up 5.8%YOY. Telecom operators, despite their recent restructuring, accelerated their Metro Ethernet network construction with FTTH and high-speed capabilities. Such activities drove high to mid-range switches.

In the afterglow of the Beijing Olympics, CCID Consulting expects switch growth to resume in 3Q08 and 1Q09. FTTH construction will drive Metro Ethernet, a major focus of vendors, which in turn will drive midrange to high-end switches. The competition in Metro Ethernet will heat up in 2H08.

China's natural disasters, interestingly, helps spur network growth.

China's industries and government also helped maintain switch market momentum. Financial services, government, and energy sectors increased their IT applications, thereby driving switch purchases. China's natural disasters in the 1H08, such as the Sichuan earthquake and winter snowstorm, spurred the use of emergency communications, video conferencing, and monitoring by government and industry. Those events further drove network construction, and therefore network equipment purchases.

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source: ccid consulting, July 2008

Cisco and H3C have the largest market shares.

For enterprise customers, Cisco leads, while H3C maintains a strong second. For telecom operators, Huawei and Juniper are the major competitors. This year in China, Juniper launched its EX series high performance switching products, increasing pressure on vendors in the high-end switch market, such as Cisco in telecom operators. For Metro Ethernet, Huawei, Nortel and FiberHome have all devised their own strategies to target and compete.

Competition in the midrange and low-end switches is also heating up.  Major vendors are China's second-tier ones such as FiberHome, ZTE, Rujie Networks and Digital China. They are all increasing their investments in the hope of a market breakthrough.

Product attributes in China.

Switch product characteristics for the year in China include high capacity, high performance and layer 2/3 functionality (integrated routing features). 10 Gigabit switches have become the mainstream in China.

For China's enterprises, telecom, data center and network storage drive the application for high-end switches. Network and carrier-grade Metro Ethernet construction drive higher speed broadband applications, such as IPTV. IEEE's 10 Gigabit Ethernet switch standard, delivered in May 2007, will help drive the trend to larger capacities and forwarding rates.

There will be increasing trends towards wireless (WLAN) and security. WLAN has become more mature and embraced in China. China Telecom has made large-scale purchases in WLAN equipment this past May. WLAN provides relatively convenient and cost effective installation and users like the flexible access WLAN provides. With rapid adoption of WLAN, so will WLAN-integrated Ethernet switches. Finally, networking security continues to grow in importance, so Ethernet switches with more security features would be well positioned in China's markets.

For more information

Please contact us for these and other China-related data, information and products.

Unless otherwise specified, all information provided is sourced from CCID Consulting.


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