Software defined networking (SDN) may be the talk of the town, but as providers try to figure out how to use it in their networks, it could dampen near-term opportunities for the largest router/switching vendors, says Infonetics Research.
While the top four router/switching vendors Cisco (Nasdaq: CSCO), Huawei, Alcatel-Lucent (NYSE: ALU) and Juniper Networks (NYSE: JNPR) maintained their dominant market positions in 2013, fourth-quarter carrier router/switch revenue declined 4 percent from the same period a year ago.
"The fourth quarter is usually an indicator for the current year and sometimes a bellwether for the future," said Michael Howard, principal analyst for carrier networks and co-founder of Infonetics Research. "In the most recent quarter (4Q13), North America had a double-digit sequential decline in carrier router/switch revenue rather than the usual budget flush, with weakness coming mostly from Verizon (NYSE: VZ) and AT&T (NYSE: T), among the global leaders of SDN activities."
AT&T, for instance, recently launched its user-defined cloud strategy that leverages a mix of Network Function Virtualization (NFV) and SDN. Joining AT&T is CenturyLink (NYSE: CTL), which began deploying a next-gen OSS/BSS platform from Ericsson that it said will improve service delivery times and control for the services it delivers to its growing enterprise customer base.
Overall 2013 worldwide service provider router and switch revenue-including IP edge and core routers and carrier Ethernet switches (CES) was $14.5 billion, up just 2 percent from 2012
Two areas that are showing promise are core routers and driving more interoperability between routers and optical equipment.
The ongoing move to 100GE is prompting service providers to upgrade their core routing network infrastructure. Core routers rose 3.3 percent for the full year 2013, but were flat sequentially.
Another area is serving the content delivery networks (CDNs) market and providing smart traffic management across routes, which Howard says are "aimed at making routers and optical gear cooperate more closely."
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