Switching and routing market to grow 4.4% in 2012, breaking stagnant Q1

A new report from Ovum predicts that the global service provider switching and routing (SPSR) market will grow 4.4 percent in 2012 to $15.4 billion, despite the fact that growth effectively came to a halt in the first quarter of the year.

The independent telecommunications analyst firm, a part of the Informa Group, said that global SPSR revenue was down 16.4 percent compared to the fourth quarter of 2011 and 0.2 percent versus the same first quarter time period in 2011. This marked the first time that SPSR quarterly revenue declined from the year-ago period since the fourth quarter of 2009, the analyst firm said.

"In 1Q12, annualized revenue growth paused. Declines in the IP/MPLS core and access switch and router segments were nearly balanced out by gains in the IP/MPLS edge and IP/Ethernet products segments," David Krozier, Ovum's principal analyst, network infrastructure, said in a news release.

The market wasn't bad all over in the first quarter, Krozier said. Vendors with "significant exposure" in South America, Central America and even North America benefited from double digit growth in those markets.

"The strongest performance in 1Q12 was in the smallest geographic segment, South and Central America, with sales up 25 percent from the year-ago quarter," Krozier said.

North America grew 13 percent but the Asia-Pacific market was off by 0.7 percent and EMEA was down by 18.5 percent, he continued.

Two vendors—Alcatel-Lucent (NYSE: ALU) and Cisco (Nasdaq: CSCO)—were singled out for their first quarter performance.

"Alcatel-Lucent turned in a particularly strong performance in South and Central America in the quarter while Cisco produced record revenues in North America," Krozier said, adding that both vendors "managed double-digit growth in the Asia-Pacific region to outpace global growth."

The second quarter, he said, will see things start to improve for Asia-Pacific and offer "reasons for optimism" in EMEA despite concerns about Southern European economies.

"SPSR carrier spending in NA and SCA will remain healthy" throughout the year, he concluded.

For more:
- see this news release

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