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The need for connectivity within an enterprise/banking/government is driving the need for routers in India. Also, as the IT department is centralizing the applications, primarily driven by the need for better visibility into the operation of the organization, bring in efficiency in operation, to reduce operational expense, need for the offices spread across the country to access the applications is what is driving the router market in India.

The router market has grown substantially thanks to the growth in enterprises needs. The market grew by 36% to touch Rs 1,437 crore during fiscal 2006-07 from Rs 1,059 crore in 2005-06.

The market is dominated by Cisco, which grew its revenue by 30% to Rs 1,164 crore in 2006-07 from Rs 893 crore in FY '05-06. Juniper is the nearest competitor to Cisco with a market share of 10.6%. Juniper has clocked revenue of Rs 152 crore as compared to Rs 80 crore in the previous fiscal, recording growth of 90%. Dax reported revenue of Rs 53 crore, registering 23% growth over previous fiscal's Rs 43 crore. Dax has almost maintained its market share. Huawei's revenues stood at Rs 38 crore, registering 90% growth, compared to the Rs 20 crore it netted during 2005-06. Nortel, which is mainly focusing on Edge routers, and SMBs will become a main focus area during the current fiscal. Others like 3Com, HP Procurve, Allied Telesyn, Enterasys, Multitech, BA Systems, ZyXEL Technologies, and Matrix contributed to the growth of the segment.

Routers have matured over the years and have become an intelligent network device. They now have the capability to integrate features such as content processing, VPNs, firewalls and load balancing. Wireless capabilities are also becoming popular, doing away with the need for separate wireless access points for small office networks. Customers are realizing that they can get a lower TCO by deploying these routers as compared to deploying multiple devices. Due to the inherent architecture of these devices, it is easier to add new services, most of which just need a minor software or license upgrade. Meanwhile, switches are packing more punch with greater processing speed.

MARKET DYNAMICS
There has been a significant technological change in the market in the recent years. What we will see now is more of services deployed than devices. We will also notice customized features, being offered instead of bundled package offerings. Also, there will be major technological change facilitating "pay-per-use" rather than deploy and pay schemes.

On the product front, the industry foresee products which are highly scalable, reliable, appliance integrated with routing, QoS, VPN, IDS/IPS at branch offices will be the one to emerge as a winner.

High-end enterprise networks such as private banks, stockbrokers, manufacturing, distribution, and retail outlets are amongst the few who have invested in VPN enabled routers and will continue to invest with larger focus on services. SMBs expecting lowered cost of outsourcing, looking for a bundled service package that not only offers standard support but also critical incidence management with variable pricing, is clearly emerging as a fraud.

Adoption of WiMax/Wi-Fi, SWAN's broadband telecom infrastructure will become a reality this year and is most promising for the next two to four years. Considering the convergence of voice, data, and video and the high growth in the network traffic, there is an increasing demand for routers that are dynamic and intelligent with built-in resilience and security. Owing to the demand for multiple services, the newer routers are more robust and able to handle all kinds of traffic. Not to forget their capability to handle huge, and sometimes sudden, traffic growths. As far as scalability is concerned, routers today allow for capacity expansion and upgrades without much expenditure.

Owing to increasing security threats in the recent past, buyers are going in for routers with reliable attack protection and hacking protection solutions. Routers that separate the routing and forwarding functionality are in demand for they reduce the risk of downtimes. Port density is a key evaluating factor. However, with the wide variety of applications, importance of revenue per port has also emerged as a crucial deciding factor wherein the per-port revenue is related to the variety of value-added services that can be offered. In terms of value, the growth has been good as high-end routers (Gigabit routers) have made inroads but the average price per unit has dropped. As telecommunication companies roll out their networks (lay fiber across the country), the market is poised for impressive growth again.

And considering that nationwide networks and enterprises are moving towards increased connectivity, this segment is likely to witness a healthy growth within the LAN equipment segment. With investments in the telecom infrastructure increasing, router deployments by telecom service providers have been on the rise. State Wide Area Networks are major users of low to mid range routers for inter-connecting various government offices.

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