EMEA Network Equipment Spending Holding Up in 3Q08

IDC’s EMEA Quarterly Network Tracker shows a quarter- over-quarter increase of 4% of network equipment spending to reach $3.8 billion in the third quarter of 2008, and a decline of 5% compared to the same period in 2007. However, when excluding residential equipment, the networking market shows a more positive picture, with 8% quarterly growth and a decline of 1% compared to the same period last year.

“Although the economic climate has not fully hit the networking market, growth is definitely lower compared to 2007 and we expect 4Q08 and 2009 to be more difficult for networking vendors as customer deals are postponed,” said Evelien Wiggers, research manager for European Enterprise Communications Infrastructure at IDC. “We believe, however, that the fundamentals for network growth continue to be strong and that the networking market continues to see growth albeit at a much slower rate than before the economic crisis.”

Among other key findings are the following:

– Demand for enterprise WLAN equipment was most stable, with revenue growth of 8% QoQ and the same growth YoY. Ethernet switch revenue grew 10% QoQ but only 1% YoY. Router revenue increased 5% QoQ but declined 4% YoY.

– The share of revenue coming from the residential market declined from 20% in 2Q08 to 17% in 3Q08. A maturing market primarily caused this decline, and together with declining sales prices this continues to put pressure on the residential networking market.

– Cisco remains the largest networking vendor with a market share of 55% of the total networking market (total of routers, switches, WLAN) an increase of two percentage points compared to 2Q08. Juniper continues to be the second largest player with a share of 4.7% and Alcatel-Lucent holds third position with 4.5%, followed by HP Procurve, which has a market share of 4.4%.