10/12/2004 -- If market research firms like International Data Corp. (IDC) and In-Stat/MDR are to be believed, Ethernet switch ports have been shipping at a phenomenal rate.

IDC, for example, says that the worldwide market for LAN switches is up 23 percent over the year over last year’s performance—even though sales of LAN switches declined by 2 percent in Q2. In-Stat, for its part, has reported that total worldwide switch port shipments rose by 16 percent in 2003, from 166.3 million ports shipped in 2002 to 193.0 million in 2003.

"Despite the dip this quarter, we believe that 2004 will be a growth year for LAN switching,” said Max Flisi, research analyst in IDC's Enterprise Networks program, in a statement.

Flisi, like other analysts, cites a sharp uptick in shipments of gigabit Ethernet ports as one important contributor to the Ethernet switch market’s strong performance. “Gigabit is certainly one of the main drivers, having already surpassed fast Ethernet in revenue terms in 1Q04. We expect this trend to continue as gigabit to the desktop and in datacenters becomes more prevalent," he wrote. "Meanwhile, prices are gradually coming down. In light of that, we see 10-gigabit Ethernet ports, which are commonly used to aggregate gigabit connections, also increasing at an elegant pace."

As Flisi notes, much of the demand for Ethernet switch ports has been fueled by attendant drops in switch average selling prices (ASP). Research firm In-Stat says this is a double-edged sword of sorts for networking vendors: It’s fueled unprecedented demand, to be sure, but it’s also resulted in an 11.8 percent year-over-year decline in Ethernet switch revenues.

A lot of companies are benefiting from this strong performance, researchers say, but some—like Cisco Systems Inc.—are benefiting more than others. IDC, for example, found that Cisco remains the switch market leader by a substantial margin, with HP, Nortel, 3Com, Extreme and Foundry filling out the next five spots.

In fact, IDC says, Cisco has so much padding between it and its competitors that HP, Nortel and others are effectively locked in a "battle for second place. In the past two years, especially, no single vendor has been able to maintain a second place spot in the Ethernet switch market with more than 6 percent of overall share. HP and 3Com are closest to the magic 6 percent figure, IDC researchers say, with Nortel at their heels. -Stephen Swoyer