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In today's increasingly complex business environment, the network is facing new challenges. Applications and network infrastructure of switches that transport them, are crucial tools for enhancing user productivity.

But this is a tough time for the switch industry. And shrinking market size of this segment is a serious matter of concern for the major players in this space. At present, when the whole equipment industry is hit by the economic downturn, the switch segment is no exception.

According to VOICE&DATA estimates, the switch segment has managed a meager 1.5% growth with the total market size of Rs 2,350 crore in the FY 2008-09 as compared to Rs 2,316 crore in the last fiscal. Though there was a 2% decline in the revenue of Cisco for FY 2008-09, it still dominated the switch market with 72.5% market share and a total revenue of Rs 1,702 crore. D-Link occupied the second position with a revenue of Rs 136 crore as compared to Rs 130 crore in FY 2007-08, a marginal growth of 4.6%.

3Com reported revenues of Rs 100 crore, registering a 5.5% growth over the previous fiscal's Rs 94.8 crore. Another player, DAX, made Rs 29 crore in revenues with a satisfactory growth of 9.8% and a market share of 1.3%.

Switching Trends
The switch market is looking at power over Ethernet as VoIP handsets and other networked devices come to the market. IP communications, wireless and collaborative applications, video, network, intelligence and optimization for web 2.0 are some other market trends. Besides, IPv6-enabled switches, access control by integrating the switch with dedicated anti-virus, IDS, IPS devices and bandwidth bundling with multiple Internet links are some recent trends.

Gigabit Ethernet and layer switches too are expected to fuel demand in the coming few years.

A positive and encouraging market trend is the increase in investments on networking infrastructure. An increase at a normal pace is being witnessed, even amidst the financial crisis. Also, green technology is pervading the networking market as well, and a few vendors have launched green Ethernet switches to meet their green goals. Some of the other market trends initiating growth in the switch market are:

• Data Center/ Server Consolidation: Consolidation, virtualization and automation are some of the key innovations that enable efficient utilization of data center space, power, cooling and IT resources.
• Security in the Network: As networks are growing in complexity enterprises are looking at solutions that will allow them to integrate security in every aspect of their network.
• IP Communications: Enterprises have come to realize the value of VoIP given its inherent cost effectiveness, ease of deployment and management.
• Virtualization: Organizations are looking at virtualization in a big way as its benefits include savings in rack space, efficient resource allocation, reduction in maintenance costs, and lower total cost of ownership.

Hottest Technology
FY 2008-09 witnessed the addition of many new and innovative technologies in the switch space. One of the most significant additions in Cisco's product portfolio was the launch of the Cisco Nexus 7000 Series. The Nexus 7000 is a scalable modular platform that delivers up to 15 terabits per second of switching capacity in a single chassis.

In FY 2008-09, Juniper focused on the innovation of EX series switches which enable new architectures that reduce cost and complexity. Unified management and automation tools to consolidate system monitoring and maintenance save time and money.

Another technology addition was Virtual Chassis technology currently available on the EX4200 lines. It allows up to ten switches to be interconnected and managed as a single, logical device.

For DAX Networks, POE support in unmanaged switches, SFP support in unmanaged switches, 10G enabled L2 switches, switching with time based access list multiple port combination switches, data acquisition and device management and high performance delivery were some of the latest technology additions during FY 2008-09.

Another player, Extreme Networks added some new technologies like automation framework, green networks, reliable networks and IPv6 adoption.

Major Contributors
On the technology front, increased adoption of collaborative technology, unified communications, data centers and security solutions in India, and trends like remote networking and enterprise focus on productivity improvement are driving the growth.

IPTV applications and broadband Internet to home will drive the switch industry. Investments in IT/ITeS space and outsourcing, commercial mid-market, government IT infrastructure initiatives, telecom infrastructure upgradation, data centers and VoIP security will also be key drivers. e-Governance as a part of ICT initiatives is driving the demand for switches at kiosks. Consolidation of branch offices, new data centers and increase in demand of bandwidth applications are some of the other growth factors.

Besides, continued growth and transformation across all key verticals like manufacturing, BFSI, retail, banking, infrastructure, IT/ITeS, government, telecom, defense and BPOs are the major contributors to the switch market.

Key Achievements
Inspite of the economic downturn, FY 2008-09 was a year of achievements for major players in the switch space. For Juniper, the major achievement was the introduction of EX-Series of Ethernet switches, setting new benchmarks for high performance network infrastructure in the enterprise.

Dax Networks bagged a major switching order in LAN connectivity for more than 7,000 village kiosks from the SREI Infrastructure project in various states. The company also received some big orders from Navkar Computers, HQ Western Command, ERNET India, Sher-e-Kashmir, and e-Gram Vishawagram Society.

Extreme Networks opened three sales offices to strengthen the channel route and lay out a stronger alliance with major partners. It launched some very efficient products in the market like BD20808 and Summit X650 series switches.

Outlook
Though the Indian switch market is feeling the heat of recession in terms of revenue and growth, but the economic downturn also favors Carrier Ethernet technologies and products as they are a less expensive alternative compared to legacy equipments.

In the coming years, switching buys will move around 10/100/1000 to desktop. Layer 3 standardization, embedded power over Ethernet in all switches will be the standard buying criteria.

The high levels of connectivity, along with the convergence of voice and data, and user enabled features will contribute highly to the switch industry growth in the next couple of years.

Arpita Prem
arpitap@cybermedia.co.in