Need switches? Buy now, report says

Network World - If you're in the market for Ethernet switches, now's the time to buy.

According to a quarterly report from Infonetics, the price of Ethernet switches is declining in the mid-single digits over the course of this year, amounting to 10% to 20% drops overall.

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"Part of that is to be expected," says Matthias Machowinski, the analyst who wrote "2011 (2Q11) Ethernet Switches" market share report. "Things get cheaper over time."

But fierce battles among vendors are accelerating price declines. "The competitive picture is drawing pricing down faster than usual," he says.

Prices are declining so much that even though the number of Ethernet ports shipped will increase over last year, the revenues reaped from those sales will decline, he says.

The declines are likely not driven by the generally weak economy, Machowinski says, because during the recession that started in 2009 there was no such falloff in prices. Overall revenues for Ethernet switch sales dropped, but that was because customers were buying switches with lower speeds and fewer features - the lower end gear.

The heaviest competition is between Cisco and HP, with HP apparently making some headway against Cisco, picking up more than 2% and Cisco losing 3% of the market share.

Lesser players are doing better with Extreme, Juniper and Enterasys all showing 10% or more growth, he says.

In the router market businesses seem to be investing in routers for the core of their networks but not for their branch offices, Machowinski says. Businesses seem to be slowing expansion, meaning fewer new branch offices to equip. "There's a selective investment being made in routers," he says.

Unlike in the switch market, revenues from routers are not expected to decline.

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