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December 06, 2004

Cisco Rules L4-L7 Switch/Load Balancer Market

The worldwide layer 4-layer 7 switch/load balancer market bounced back with a 13 percent increase in revenue between 2Q04 and 3Q04, after a 5 percent decline between 1Q04 and 2Q04, according to Infonetics Research's quarterly market share and forecast service, L4-L7 Switches and SSL Products. Unit shipments increased 5 percent over 2Q04, and will grow in the low single digits from 1Q05 through 3Q05.

As there are no compelling applications driving increases in L4-L7 products right now, vendors are struggling to maintain revenue at current levels, though some are expected to see low single-digit growth in the coming quarters. The growth, albeit slow, in annual worldwide revenue through 2007 is being driven mainly by SSL-enabled L4-L7 switch/load balancers.

"For the third quarter in a row, revenue for layer 4-layer 7 switch/load balancers with SSL increased in the low double digits, growing 11 percent in 3Q04 to $58 million," said Matthias Machowinski, directing analyst with Infonetics Research and author of the report. "Many companies have been integrating SSL functionality into their high-end switching portfolios over the last year, and SSL-enabled products now make up 38 percent of the total layer 4-layer 7 switch/load balancer market. That's a significant portion, and we expect to see it increase further through 2007."

3Q04 Market Highlights
  • Cisco is the worldwide leader in L4-L7 switch/load balancer without SSL market, with 44 percent revenue market share and 44 percent port market share; Cisco is also the market share leader in LAN switching overall.
  • F5 is the worldwide leader in the L4-L7 switch/load balancer with SSL market, with 49 percent revenue and 51 percent port market share, but face strong competition from Cisco and Nortel.
  • Worldwide total dedicated SSL hardware revenue is up 3 percent from 2Q04.

L4-L7 Switches and SSL Products tracks SSL server peripheral cards and dedicated SSL appliances, and layer 4-7 switches/load balancers with and without SSL. Forecasts are updated quarterly and cover all regions (worldwide, North America, EMEA, Asia Pacific, and CALA). Companies tracked in this service include AEP, BlueCoat, Broadcom, Cisco, Dell, Extreme, F5, Foundry, Hewlett-Packard, nCipher, NetScaler, Nokia, Nortel, Radware, SonicWALL, TopLayer and others.

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