The role of networks has evolved over the years; initially, networks provided basic connectivity among users, bandwidth, and access to applications that supported business processes, and the “intelligence” existed outside the network. Today, networks are expected to offer increased and diverse functionality as organizations face the demand for increasing scalability of infrastructure, integration of complex technologies, security threats from hackers and viruses, and escalating costs of systems integration.

Along with the growth of the enterprise requirements, the router market has also shown significant growth. The market grew by 25.9% to Rs 1,810 crore during FY 2007-08 from Rs 1,437 crore in the last fiscal. The market is dominated by Cisco, which grew its revenue by 24.1% to Rs 1,444 crore in FY 2007-08 from Rs 1,164 crore in the previous fiscal. Juniper is the nearest competitor of Cisco and has clocked revenues of Rs 192 crore, as compared to Rs 152 crore in the previous fiscal, recording a growth of 26.4%.

DAX reported revenues of Rs 55 crore, registering a 3.8% growth over the previous fiscal's Rs 53 crore and maintained its market share. BA Systems, a new entrant last fiscal, made Rs 11.57 crore in revenues with a 0.6% market share. D-Link registered revenues of Rs 7 crore as compared to Rs 10 crore in the last fiscal. Others like 3Com, HP Procurve, Entrasys, and Zyxel Technologies contributed to the growth of this segment.

Today, vendors are introducing routers that have the capability to integrate key features such as content processing, VPNs, firewalls, and load balancing.

Growth Drivers
In the Indian market, some verticals that will act as key drivers are distribution, organized retail industry, FMCG, expansion of BFSI, stock trading, micro finance, and implementation of core banking software.

Networking remains an important pillar of the IT business. Voice, video, and data are now so standard that users expect to download video, make everyday telephone calls, and download huge applications over fixed-line networks as part of their normal working day.

In the enterprise segment, consolidation of server and application, necessitating the need to build better and bigger WAN infrastructure, convergence of applications such as voice, video and data, and expansion of the banking infrastructure are major growth drivers.

Market Dynamics
The trends could be categorized into two segments-service providers and enterprise. In the service provider segment, customers are moving toward larger platforms that support multi-terabit capacity, highly reliable, high availability that allows convergence on the core. In the enterprise segment, MPLS/MPLS traffic engineering and MPLS VPN are mandatory requirements in RFP/tenders.

Also, there is a trend toward routers with tight integration and security features such as firewall/encryption. Besides IP VPN over last mile wireless links, perimeters security routers are a major market in India.

Large enterprises are seeking a truly futuristic approach to their routers-moving toward deploying intelligent, optimized hardware and software platforms to guarantee embedded security, VPN and significant performance; and at the same time, providing services covering VoIP, videoconferencing, WAN optimization, and network analysis.

Globally and in India, the market is moving toward integrated devices with built-in multiple capabilities. Security is a big focus area and it is evident from new products being introduced by vendors.

Additionally, given the boom in the Indian telecom space, carrier-class routers with the capability to handle and route data in terabits will be piloted and deployed.

FY 2007-08 has turned out to be very good for most companies. For D-Link India, the main orders came from Abhinav Co-operative Bank, Angel Broking, and Goa Police. BA Systems also got some major orders from the company Motilal Oswal, Fortune, Magnum, Anugraha, BMG etc.

Changing Technology
There has been a significant technological change in the market in recent years. Cisco's focus is on providing businesses with the solutions that help them transform their businesses both globally and in India. The company has strengthened its product portfolio in the last one year, with the introduction of many new enhanced products.

For D-Link, the latest technology addition is the new router series, called Business Gateway, designed to meet the requirements of the SMB segment and branch connectivity requirements of large enterprises. The year has been more of consolidation of the existing technologies and adoption by enterprise networks for BA Systems.

For Juniper Networks, there have been many innovations in the routing segment, like routers capable of supporting 100G interface, routers that require less power bit, generate less heat per bit, and require less cooling per bit, etc.

A major player in this segment, 3Com believes that the growth in the enterprise router segment has been moderate in the last couple of years due to lack of true application integration and secure, scalable platforms.

The biggest revenue stream for this segment in the domestic market continues to be service providers, consumers, retail, education, and government. BFSI, data centers, and e-government are the other segments that contribute to their revenue.

The Outlook
India is one of the fastest growing markets in the world. According to a Gartner report, the Indian market for low/mid and high/ terabit routers is expected to be around Rs 1260 crore for calendar year 2008, approximately 20% growth over last year.

BA Systems expects a compound average growth rate of 14%, while specifically on the managed routers, which are enterprise core/aggregation and enterprise managed edge, it expects about 30% growth. D-Link, on the other hand, estimates that the routers industry will continue to show high growth and will grow at around 20%. Large WiMax deployment rollout will lead to high growth. With the help of great vendor strategy and initiative, the routers industry is set to touch new records.

Arpita Prem
arpitap@cybermedia.co.in