The Size of the Market

The total market size of the networking products industry which comprised of routers, switches, hubs, NICs, structured cabling, RAS/RAC, dial-up modems, leased-line modems, ISDN modems, multiplexers, wireless radio equipment, and other networking products was estimated at Rs 1,790 crore in the fiscal 1999-2000. Previous year, the networking market was estimated at Rs 537 crore—including hubs, NICs, switches, routers, and RAS. Since a lot of products like structured cabling, modems, multiplexers, wireless radio equipment, and other networking products were included in the analysis of the market during last year, there is a huge growth of 233 percent over the previous fiscal. However, excluding the new product segments, the networking market would have been Rs 1,010 crore, which is 88 percent up from the previous year.

The size of integration market in the fiscal 1999-2000 was estimated at Rs 1,020 crore and registered a growth of 85 percent. Previous year, the integration market was valued at Rs 550 crore.

Quarter-wise revenue was on the increase with the progress of each quarter indicating that Y2K did not affect the market to a major extent. In terms of verticals, segments like telecom, and banking and finance were the most active deployers of networking, followed by IT and manufacturing. These segments
really drove the market for networking in India.

The Growth Catalysts

A number of factors can be attributed to the excellent growth of this market and ISP sector is considered to be the major one. As the number of operational ISPs increased from 20 last year to around 80 this year, the ISP business registered a 300 to 400 percent growth. Most of the ISPs have their infrastructure in place and have either already started or will start the services very soon. The ISP projects are of varied types, which is reflected in growth of different types of networks.

With companies moving the e-way and setting up their networks for Internet, Intranet, and extranet kind of applications, there was a great influx of projects, which centered around e-enablement of organizations. The mushrooming of dotcom portals, 4-5 new portals everyday, has also given a major boost to the networking companies.

The Kargil war was a boon in disguise for the networking vendors and integrators. Most of the planned projects, which were not implemented, suddenly got a major boost. The Defence personnel made their networks ready for any calamity in the future. As most of the Defence projects fall under the Non Disclosure Agreement, it is very difficult to ascertain the collective value of the projects.

With banks making "anywhere, anytime" banking a reality, there was a huge demand of networking projects from banking and financial institutions. Most of the public sector banks were busy in networking their branch offices whereas most of the multinational banks where using networks for credit card processing, providing ATM facilities, etc.. Some banks went a step further and made their infrastructure ready for joining the m-commerce bandwagon.

With telcos enhancing their networks and with lot of companies getting ready for the Domestic Long Distance (DLD), there was a large number of networking projects undertaken in the telecom sector. Most of the public sector companies like Gas Authority of India Ltd (GAIL), Power Grid Corporation of India Ltd (PGCIL), Indian Railways, and companies like Punj Lloyd, Reliance, Bharti, and others were busy setting up their broadband networks. This started generating some business for the networking market. However, this market is to be much bigger during the current year. This is one sector for which many of the top integrators and networking principals will compete intensely.

The Y2K bug, expected to severely affect the IT industry, emerged out to be a false alarm. The consistent growth of networking quarter by quarter proves this point. The boom in software scripps, the demand for new software start-ups resulted in a number of IT parks. With Internet-enabled services picking up in India, a lot of new call centre start-ups were established in different cities, thus opening up new vistas for the networking market.