5/22/2006 -- Almost all service provider router and switch categories were down in the first quarter of 2006 says market watcher Infonetics Research -- except one: IP core routers and carrier Ethernet switches and routers.

The overall service provider router and switch market is almost always down in the first quarter of a new year, and Q1 of 2006 was no exception, the market watcher reports, with worldwide revenue slipping 3 percent to $1.9 billion.

IP core router revenues grew by 5 percent (reaching $510 million) between the fourth quarter of last year and the first quarter of 2006, while carrier Ethernet switch and router revenue grew by 8 percent over the same period.

Why were IP core routers and carrier Ethernet switches and routers the only exceptions? Michael Howard, a principal analyst at Infonetics, says it's all about diverse market drivers. "Three trends are driving IP core routers and carrier Ethernet switches and routers up," Howard indicated, in a statement. "Broadband buildouts continue around the world on a massive scale, mobile data traffic is growing feverishly fast, and service providers are moving to next-gen IP and Ethernet networks while decreasing investments in ATM networks. Multiservice core switch revenue and ports were up in the first quarter in Asia Pacific, where they are still using more ATM switches, as providers there continue strong mobile buildouts and DSL backhaul. But even in Asia, multiservice switches will decrease every year here on out, as they will worldwide."

The resurgence of the core router and carrier Ethernet switching and routing markets was good news for market leader, Cisco Systems Inc., which topped Alcatel in global revenues. IP core and edge routers made up one-quarter of worldwide service provider router and switch revenue in the first quarter, while multiservice switches accounted for 75 percent.

The future looks bright for carrier-grade IP hardware, too: Infonetics expects that worldwide IP core and edge router revenues will increase by more than half (58 percent) over the next three years, while multiservice (ATM) core and edge switches will decrease by 16 percent.

Similarly, Cisco is number one in the overall service provider router and switch market, followed by Juniper. In the depressed multiservice switch market, Nortel remains the market leader, followed by Alcatel and Lucent. -Stephen Swoyer