The windfall of 1999-00 that router sales saw, promised to continue with good sales all the way through the first half of the year, but this growth rate suddenly started falling in the second half, and came down to a low-rate in the final quarter. This dramatic slowdown was due to the trickledown effect that the US economy slowdown had on IT services in India. Both ISPs and IDCs promised to falter at the end. Many big ISPs and IDCs failed to rise above the boardrooms and business plans on paper. Funding was the biggest issue why these companies could not take off.

Though spending continued among the established ones like BSNL, VSNL, Satyam, etc., but it was not to the tune of the previous fiscal. And though new ISPs like Tata ISP, HCL Infinet, Hughes Tele and ERNET, laid out their networks for Internet services, the sum total number of rollout did not match the previous fiscal, both in numbers and magnitude. An uncertain market kept them away from lavish expenditure.

The other sectors actually came to the rescue of the router segment. Banking and finance sector played the role of the knight in shining armor. Banks like Dena, Vyasa, RBI, Karnataka Bank, American Express and Global Trust executed huge projects worth crores of rupees—all of them had to link their LANs across localities and cities in the country due to competition as well as RBI directives. The financial institutions themselves connected heavily. BSE, LIC, UTI, IDRBT, Tata AIG, etc., all spent multiple of crores on wide area networking. Other sectors like manufacturing, transport/utility and government, pitched in with their own share of wide area networking projects.

So, the year 2000-01 ended with router companies clocking in Rs 408 crores through their routers. The annual growth recorded last year was 86.3 percent.

The number of routers sold during the fiscal were 24,337, as compared to 17,000 in the previous fiscal. That shows a growth by only 29 percent. But value-wise, the growth has been much better due to the better deployment of high-end routers of which some were capable of Gigabit routing. Though average price of a router further dropped to about 65,000 at the low-end of the market, prices at the mid-end were still at an average 2.3 lakh. And as you went up the value chain, Gigabit routers came at prices of Rs 60 lakh and more.

Cisco retained its grasp over this segment last year as well, despite the somewhat hyped entry of Juniper and Unisphere – two young next-generation technology startups. During last fiscal, Cisco managed to hold on to consolidate and increase its market share to 84.8 percent as compared to 72 percent of the previous fiscal. And the nearest competitor, Nortel, was way behind at just 6 percent.

The market for Gigabit router did not live up to the expectations as telecommunications build-outs got delayed due to policy delays, market uncertainty and lack of finance. The setting up of offices by Juniper and Unisphere was more of an initial market contacting/discussion process and both did negligible business in reality. Still, Unisphere were able to accomplish sales of Rs 4 crore during the last fiscal, which is approximately 1 percent of the market. This year, however, many more telecommunications backbones are expected to be rolled out, with hundreds of miles of the country already been wired up with dark fiber. And, these players are likely to play hard to not allow Cisco to monopolize this space, as it has done in the low and mid-end of the market. The market for routers looks quite promising and should again be touching its previous growth rates of hundred percent and above. That is, if the current economic slowdown does not continue beyond six months. Which could in turn, further delay long due projects in the telecommunications sector.