"'Cost is clearly the key in the DSL equipment market,'" said Jouni Forsman, principal analyst for Gartner's worldwide Telecommunications and Networking group. "'The average vendor revenue per port dropped from $95.9 in the first quarter of 2003, to $84 in the second quarter, and in the following quarters, prices will continue to be challenged. Vendors must continue rolling out increasingly cost-effective equipment, while maintaining future value-added service capability of the platform.'"

"'DSL equipment growth will continue for the next few quarters as a higher number of carriers enter deployment phase,'" said Gauri Pavate, principal analyst for Gartner's worldwide Telecommunications and Networking group. "'China will continue to increase in importance as an individual key market. CPE shipments will have to increase to catch up with the installed base of central office (CO) ports, and the unit growth on this side of the business will be stronger than CO in the future.'"

Source: "Gartner Says DSL Equipment Market Grew 16 Percent in the Second Quarter of 2003," August 15, 2003

The worldwide service provider router (SPR) market totaled $455.4 million in revenue in the second quarter of 2003, a 6 percent increase from the first quarter of 2003, according to Gartner, Inc.

"'Both Cisco and Juniper reported strong sales in high-end routers and gained revenue from North American and European service providers, which indicates recovery as they begin to build out their backbone networks,'" said Jennifer Liscom, principal analyst for Gartner's worldwide Telecommunications and Networking group.

"'Although Cisco is continuing to dominate the market, Juniper, the No. 2 vendor in revenue and shipments, also continues to perform well,'" Liscom said. "'Higher-end systems sales coupled with higher-end card interface revenue contributed to an increase in average selling price for the quarter.'"

Source: "Gartner Says Worldwide Service Provider Router Revenue Increased 6 Percent in the Second Quarter of 2003," August 14, 2003

"'The SPR market's sequential decline is probably because of economic conditions and uncertainty in the market because of the war in Iraq,'" said Jennifer Liscom, principal analyst for Gartner's worldwide telecommunications and networking group. "'The first quarter is typically a slow quarter for this market, but results from the past two quarters indicate that the market has stabilized. Increased competition by two new players, Procket and Caspian Networks, is expected in the second half of 2003, possibly driving pricing downward and changing market share dynamics.'"

"'The first quarter is indicative of market behavior for 2003, where we believe the behavior of the SPR market this year will change from large quarter-over-quarter fluctuations to mild gains and losses while positioning itself for stronger growth in 2004,'" said Liscom. "First quarter results are consistent with this scenario."

Source: "Gartner Says Worldwide Service Provider Router Market Totaled $428 Million in the First Quarter of 2003," May 15, 2003

"'These customized communications services will radically change the definition of what constitutes a call,'" said David Fraley, principal analyst for Gartner's worldwide telecommunications and networking group. "'In the future, calls will include voice, video, data, TV broadcasts and multimedia collaboration. In many cases, these will be combined into a single communications session.'"

"'Deferring maintenance expense can occur for a while, but not forever. Delaying those investments might bring carriers into the unfortunate situation, that at a later point, their spending requirements not only have to catch up, but have to exceed previous levels to accommodate the excessive and complex traffic demands, operational expenditure reduction targets, and the necessity to quickly generate sources of additional service revenue,'" said Bettina Tratz-Ryan, principal analyst for Gartner's worldwide telecommunications and networking group.

"'By 2005, three different trends will converge,'" said Tim Smith, managing vice president. for Gartner's worldwide telecommunications and networking group. "'These converging trends - technology maturity, service provider readiness and robust CAPEX budgets - will start the eventual unification of the communications revolution which will give consumers ultimate control.'"

Source: "Gartner Says Next-Generation Network to Begin to Evolve in Next Two Years," April 10, 2003

As service provider routers (SPRs) continue to form the basis for additional telecom services and next-generation infrastructure, the worldwide SPR market totaled $1.9 billion in 2002, according to Dataquest Inc., a unit of Gartner, Inc.

"'Overall IP routing market growth is a direct result of new market penetration and a trend toward transformation from existing networks to an IP/MPLS consolidation,'" said Jennifer Liscom, principal analyst for Gartner Dataquest's worldwide telecommunications and networking group. "'Customers as a whole are looking for more than just routing functionality. They're requiring value-added services in addition to complementing their existing platforms and expanding to new technologies.'"

"'Although the SPR market showed signs of leveling off at the end of 2002, the outlook for the market remains relatively flat in 2003,'" said Liscom. "'Strong sales in edge and broadband aggregation routers will lead to recovery in the core, but recovery for the SPR market is still not expected until early 2004.'"

Source: "Gartner Dataquest Says Worldwide Service Provider Router Market Totaled $1.9 Billion in 2002," February 19, 2003

"'The market has yet to see any significant return to corporate buying, and in the consumer market, buying also appears to be falling further back,'" said Rachna Ahlawat, senior analyst for Gartner Dataquest's Enterprise Networking and Communications Worldwide group. "'Uncertainties surrounding the threat of war, combined with the overall global economy continue to undermine business confidence. Enterprises are adopting a more conservative approach and are further tightening their budgets.'"

Gartner Dataquest analysts said it's becoming a "buyer's" market as vendors are reducing their prices for their products and offering bigger discounts in regions where the demand still exists.

"'The availability of refurbished switches from several third-party vendors and buy-back options from switch manufacturers are also driving down the cost of equipment,'" said Ahlawat. "'While it will take several quarters for the market to show positive revenue growth, the vendors that are clearly differentiated on product features, price, and performance will reap the benefits.'"

Source: "Gartner Dataquest Says Ethernet Switching Market Experienced a Drop in Revenue as Shipments Increased in 2002," February 14, 2003

"Despite the rapid price erosion from the flood of new bandwidth, the Asia/Pacific leased line market will return to positive growth in 2003, according to Dataquest Inc. a unit of Gartner, Inc. Asia/Pacific leased line market revenue is forecast to grow from $12.9 billion in 2002 to $13.3 billion in 2003."

"'The biggest users of leased lines are corporations, followed by cellular operators, Internet service providers and alternative carriers,'" said Alayne Wong, industry analyst for Gartner Dataquest's worldwide telecommunications group. "'Bandwidth demand is actually very strong as many Asian markets are still expanding and higher-speed applications are emerging. However, revenues are muted by falling prices.'"

"Local leased line revenue is expected to reach $6 billion in 2003, an increase from 2002 revenue of $5.7 billion. "'This is the main growth segment for many countries and incumbents still have virtual monopolies over this sector with little pressure to cut prices. Demand from corporations is still growing strong for corporate networks. In addition, cellular carriers have emerged as the next biggest buyer for linking base stations to support an increasing subscriber base,'" Wong said."

Source: "Gartner Dataquest Says Asia/Pacific Leased Line Market Return to Positive Growth in 2003 Despite Bandwidth Glut," December 5, 2002