Worldwide enterprise switch shipments totalled USD 21.7 billion in 2009, down from USD 25.5 billion in 2008, representing a decline of 14.9 percent, according to a study by Canalys. The year ended more positively as sequential quarterly shipment growth gained momentum. The first three quarters of the year were particularly difficult, as businesses first assessed the impact of the global recession following the banking crisis late in 2008 before committing to any spending. Shipments during this period were down by more than 15 percent year-on-year in each quarter, with volumes bottoming out in Q1. Confidence began to slowly return toward the end of the year, with the market peaking in Q4, as shipments grew 15.5 percent over the previous quarter and down only 3.5 percent on the same period in 2008. The recession has created opportunities for enterprise switch vendors to displace competitors' installed bases, with many businesses re-evaluating the value offered by their existing suppliers. Overall, Cisco continues to lead the market by a large margin, accounting for 68.1 percent in terms of shipment value. But this has been gradually eroded, with its share declining from 72.8 percent one year earlier. HP has made the most gains in 2009, with its share increasing from 5.8 percent in Q4 2008 to 8 percent in Q4 2009. The proposed acquisition by HP of the number three vendor 3Com will create a clear challenger to Cisco. Juniper Networks also made a big impact in 2009, more than doubling its switch shipments as it extended its position in routers and security. Brocade's Ethernet networking business struggled on a sequential basis, but grew year-on-year, while Extreme Networks enjoyed a better quarter in Q4 following disruptions to its supply chain impacting shipments in the previous quarter. Merger and acquisition activity, as well as disruption to vendors' go-to-market strategies, will have a major impact in this year, with HP's 3Com purchase as well as Avaya taking on Nortel's networking business, the study stated. Canalys expects the enterprise switch market in this year to exceed 2009 levels as businesses seek to replace aging infrastructure, but it is extremely unlikely to bounce back to pre-recession levels, as economic growth appears fragile and dependent on government stimulus packages.
