3/23/2004 -- Theres both good and bad news to be found in the latest Ethernet switch market data from researcher In-Stat/MDR.

For Gigabit Ethernet enthusiasts, theres double reason to celebrate, as overall shipments grew during the fourth quarter of 2003 at a double-digit clip, while 10 GB Ethernet uptake, in particular, exploded.

But even though overall shipments of Ethernet switches grew at an encouraging rate during Q4 2003, the news for many vendors wasnt quite as encouraging.

First, the good news. In-Stat found that the overall Ethernet switch market posted solid growth during the fourth quarter of 2003, increasing by 7 percent to 55.6 million ports shipped. The researcher attributes this growth in port shipment volumes to an increase in Layer 2 Fixed port shipments, which experienced growth in both the Managed and Unmanaged segments.

It was an especially good quarter for overall Gigabit Ethernet shipments, which In-Stat/MDR says grew at very strong double-digit rates. For the quarter, the researcher found that 10 Gigabit Ethernet port shipments exploded by nearly 300 percent due largely to a sharp uptick in Ciscos 10 Gigabit Ethernet shipments.

The bad news, of course, is that Gigabit Ethernets gains were notched at the expense of bread-and-butter Fast Ethernet uptake. Layer 3 port shipments experienced a steep decline during Q4, In-Stat says, largely as a result of a drop in shipments of Ciscos Layer 3 Fixed Fast Ethernet devices. Also telling, says the researchers, was that Ethernet switch average selling prices (ASP) declined by almost nine percent during Q4, leading to a reduction in total revenues from the third quarter ($3,093.8 million compared to $3,016.2 million).

Vendors who focus primarily on Layer 2 Fixed products e.g., D-Link, NetGear, 3Com, and Ciscos Linksys division -- grew their overall shipment volumes and revenues during the fourth quarter. It was a mixed quarter, In-Stat found, and even though some vendors shipped a lot more ports than they did in Q3, they nevertheless failed to grow their revenues again, largely as a result of depressed ASPs. For the quarter, vendors that experienced revenue growth were typically companies such as Nortel Networks, Foundry Networks, and Enterasys which focus on higher margin products. -Stephen Swoyer