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Of the total switching market in India, the lower-end market would be around 15 percent, workgroup switching around 40 percent, enterprise switches at 35 percent, and high-end enterprise switches (chassis) at approximately 10 percent. Enterprise switching market was Rs 993 crore in FY 2003–04 with a growth of 18 percent.

Layer 3 Exceeds Layer 2
With hubs being replaced by managed switches the vendors are doing more business in the managed switches segment. But as compared to layer 2 switches, the layer 3 and layer 4 switches are gaining more popularity, as they are more cost effective compared to layer 2.

Vendors like D-Link have been raking in good revenues from this shift of hubs to managed switches. D-Link is also looking forward to its entry into the high-end enterprise segment with its co-branding with Foundry Networks, for high-performance enterprise and service provider switching, routing, and Web-traffic management solutions.

In terms of layer 2 fixed configuration products, Cisco leads and 3Com and D-Link are close at its heels.

With convergence in applications, managed switches are being looked at more seriously, especially the layer 3 switches are further gaining momentum. Manufacturers will make all managed switches as stackable. Chassis continue to get bigger in terms of the number of ports that can be supported. There is a visibly high usage of high gigabit mode especially in the private banking segment due to the continuous opening of new branches. There has been a transition towards gigabit at the desktop, with many security features also being integrated in the desktop switches.

Users are moving to 10 Gb and using switches with router functionalities built in. As compared to last year, there has been an increase in the number of edge switches sold. With Foundry being a known leader in these segments, D-Link expects to triple its cash inflows from this market. With the market moving from Ethernet to fast Ethernet, there has been a high demand of gigabit Ethernet for uplink connections, inter switch connections, and core network connections especially for new installations.

With fiber in place and Ethernet-to-home arriving on the scene, vendors are all geared up to cater to the telcos of the country, as there will be higher demand for unmanaged and basic managed L2 switches. With DSL networks outdoing the MAN networks, switches are now used on the DSL networks. With more and more NOCs and hubs being set up, network equipment is being consumed in huge numbers, of which enterprise switches form a sizable chunk.

The Business Flows
BFSIs contribute highest to the revenue pie; and telecom, educational institutes, and government have also made a significant presence. The private banks continue to be high users of managed switches. With further expansion into class B and C cities, the networks continue to grow.

Another market that is placing orders is the PSU segment, with its aggressive computerization and networking. E-governance business continues to provide big business to the enterprise switch manufacturers.

For Cisco, most of its orders continue to flow in from the BFSIs, service providers, and ITeS along with the manufacturing sector and government. Enterasys continues to rake in more business from government organizations, educational institutes, and defense. They continue to cater to their old clients, with some fresh ones like IIT Guwahti and Rourkela Steel plant.

Verticals like telecom sector, service providers, and the BPO segment will also drive the Indian enterprise switch market. Dax has made major forays into e-governance and is tapping railways and defence.

The not so talked about SME market has shown a 40 percent increase over the last year, in the switches market. With the SME market also looking at broadband, higher bandwidth connectivity, voice applications, and inter-office connectivity the demand for enterprise switches is increasing.

Cisco Continues to Lead
Cisco, a leader in the routing and switching markets, has been recording stable revenues but with a visible drop in the volumes. Cisco's market share in the unmanaged switches market is constantly sliding, a market it claims it does not want to address any more. Though a leader in the conventional routing and switching market with 90 and 60 percent market share respectively, it has been facing strong competition. Cisco took a major chunk, nearly 60 percent, of the total enterprise switch market.

In the current quarter, Cisco had a transition in its revenue share where the switching business recorded higher revenues than the routing segment. The Catalyst range of modular and fixed switches has been on the most popular charts. One of its key projects for gigabit implementation was BITS Pilani (educational institute), which has gigabit and 10 Gb at the core and to the endpoint.

There has been growth in both modular and fixed configuration switches at Cisco. Especially, the mid-range modular switch has been very successful. They have made large deployments in the BPO/call center market for clients like Wipro Spectramind, Nirvana, Transworks, vCustomer, and Moksh. Most of the big hi-tech MNCs in the country constitute their client list. In the BFSI segment, they cater to clients like SBI, ICICI Bank, and Punjab National Bank.

Due to its heavy investment in R&D, Cisco continues to keep the lead and have an edge over the competition. Cisco is working towards pulling the layer 3, layer 4, and layer 5 into the silicon, to have the capability to support advanced technologies like QSK capability, inline power connectivity, connectivity to call manager, and firewall capabilities as blades on the switch itself.

The company is looking at concentrating on IP telephony, wireless, security, storage, and optical networking. Not to loose sight of its traditional business of routing and switching, Cisco continues to offer the desired services and support through its logistics and rapid deployment centers.

Higher PC penetration in the country and a move from hubs to switches had benefited the vendors, resulting in greater demands for switches. Cisco is banking on its Linksys acquisition to make a mark in the SME and SOHO market.

D-Link's High-end Foray
D-Link has made its foray into the high-end enterprise segment offering co-branded products with Foundry Networks. It has ambitious plans to target the very high-end equipment market, a segment where it had no presence. However, strengthened by the alliance with Foundry, it is now all set to give tough competition in the high-end segment to the likes of Cisco and Enterasys.

D-Link had launched its Foundry association only in the month of February and has already bagged some prestigious deals like IIT Kharagpur where they are doing the complete LAN/WAN cabling for the institute. Some other key projects are for State Bank of India; Department of Municipal Administration, Hyderabad; BSNL's Dotsoft Project; Karvy Consultants; Surat Municipal Corporation; NIT, Jamshedpur; Multi Model Transport Systems (MMTS), Hyderabad; and Tecumseh. The company expects to register significantly high profits from its high-end enterprise business in the current fiscal year.

D-Link is slated to introduce its domestic call center in Mumbai along with its existing call center for USA customers because with easy availability of bandwidth, consolidation will not be a task. It will expand its service centers beyond the existing eight, as it aims to be a volume player in the networking segment. It is looking at tripling its revenues with its entry in to the high-end switching segment.

Others Revamp Strategies
The 3Com-Huawei alliance, and Dax's tie-up with Maipu are indicators of alliances formed to attack the low-end of the market. 3Com sold to the Parliament House, New Delhi; ONGC; Persistent Systems; MIT, Pune; Shoppers' Stop, Mumbai for their national rollout; Godrej Industries; BSNL; MTNL; IIT Hyderabad; and the government of Andhra Pradesh. It has invested in six spares and logistics centers in the country, which have contributed significantly in improving their service delivery to customers.

In India, 3Com has also invested in India Development Center, an extension of their global R&D center that will initially focus on VoIP applications. In terms of market verticals, the focus is on high growth verticals like service provider, banking and finance, and government projects, apart from leveraging on their global strengths in education and health care verticals. It expects a large part of the growth to stem from enterprise core solutions and service offerings.

System integrators like Wipro Infotech and 3D Networks generated business worth Rs 87 crore from the LAN switch market in the country.

By our Sr Reporter