6/13/2005 -- Has the whole networking space gone gangbusters? Nope—just most of it.

In this case, the Layer 2 and Layer 3 managed Ethernet switch market is just the latest example of demand for networking technologies run amok. The Layer 2/3 space grew by nearly a quarter in revenues (23.5 percent) and port shipments (23.8 percent) from 2003 to 2004, according to market watcher In-Stat.

Fast Ethernet remains the engine for most of this growth, accounting for the majority of ports shipped in 2004, but other technologies—like Gigabit Ethernet—are fast catching up. In fact, In-Stat researchers say, Gigabit Ethernet has become a mainstream switching technology, and its high-performance cousin, 10-Gigabit Ethernet, also posted exponential growth from 2003 to 2004.

All in all, it was a great year to be in the Layer 2/3 switch business. “2004 was a standout year for the Ethernet switch market,” said Sam Lucero, In-Stat analyst, in a statement. “Strong worldwide economic growth, declining ASPs, and pent-up demand for networking equipment purchases after several years of IT budget cutbacks all contributed to above-average performance by the market.”

Not surprisingly, Cisco remains the Layer 2/3 managed Ethernet switch market leader, both in terms of port shipments and revenue. The networking giant was followed by Hewlett-Packard Co. (HP), 3Com Corp. and Nortel Networks Ltd.

In the unmanaged Ethernet switch space, Cisco subsidiary Linksys trailed market leader D-Link, with Nortel subsidiary Netgear rounding out the top three.

In-Stat, for the record, says 2004’s explosive growth was something of an anomaly—at least, with respect to ongoing expansion. Going forward, the market watcher expects that the Layer 2/3 managed Ethernet switch market will grow at a more subdued 10 percent clip through 2005, achieving an overall Compound Annual Growth Rate of roughly 12 percent over the next five years. -Stephen Swoyer