3/30/2004 -- Like many other market segments, the multiservice switch space took a beating over the last few years, largely as a result of infrastructure over-investment on the part of service providers.

2003 was another down year for the multiservice switch market – the third consecutive yearly decline -- but research firm In-Stat/MDR expects that the space will recover in 2004.

For the year, In-Stat found that multiservice switch revenues declined by 16 percent from 2002. The culprit, once again, was service provider over-investment, along with the weak finances of many service providers. Instead of freeing up funds for big equipment purchases, service providers opted to invest cautiously in new equipment, adding new interface cards to existing hardware to better handle new customers and increased traffic growth.

In-Stat notes, however, that multiservice switch revenues recovered in the latter half of 2003, as service providers maxed out most of the excess capacity that existed in their networks. “Various areas of opportunity that will drive future MultiService switch sales include continued Frame Relay and ATM traffic growth, ATM aggregation of DSLAM traffic, the implementation of IP VPN services with MultiService Switches, the building of wireless infrastructure based on packet voice/data, the evolution to Voice over IP networks, and an increase in video surveillance applications,” In-Stat found.

According to In-Stat, the major multiservice switch vendors include Alcatel, Cisco, Ericsson, Lucent, Marconi, and market-leader Nortel, sales champ for the third year running with 34 percent of the market.

For 2004, the researcher expects that sales will grow by 11 percent, although much of this uptick will come in the form of a most rebound from the anemic – i.e., three year low – sales of 2003. Over the next five years, however, In-Stat projects a compound annual growth rate of 8.6 percent in total sales. -Stephen Swoyer