Press Release

Strong demand for Ethernet LAN Switches

Scottsdale, Arizona – According to Synergy Research Group’s latest report Q3 2004 LAN Switch United States Market Shares, the Ethernet LAN Switch Market grew 17% sequentially and 22% year-over-year. The exclusive results show strong demand for Ethernet LAN Switches in the US market, likely fueled by a healthy economy and customer demand for new technology.

“The continued performance of the U.S. market for Ethernet LAN switches is fueled by two major factors. Healthy economic conditions coupled with a need to upgrade existing switches,” said Joshua Johnson, industry analyst at Synergy Research Group. “In particular, business’ have a mandate to remain competitive, yet minimize costs and risk. This may mean that they are choosing to invest in equipment rather than in headcount, as benefit costs for new hires are unwieldy. Meanwhile equipment purchases offer a tax break, specifically, in 2004 businesses can take an accelerated Federal tax depreciation of 60 percent on business equipment purchases, as opposed to 20 percent each year. The market is also being aided by U.S. Federal government spending, as the Department of Defense continues to modernize its communications infrastructure.”

The other factor, according to Johnson is the improvement in technology. “Over the past few years, vendors have been adding features that improve both the performance and usefulness of their products giving customers a good reason to upgrade. The newer switches have changed considerably, improving performance of the network and therefore the mission-critical applications. They are also being purchased for the other features that prepare the network for future deployments of VoIP, 10Gigabit, wireless, deeper content inspection, and greater security.” All these technologies improve productivity in a meaningful way, and customers are responding.

The U.S. market for LAN switches remains the largest. Its growth has outpaced all other countries and geographies this quarter.

Table 1. Q3 2004 U.S. Fixed LAN Switch Market Share Rankings
1. Cisco
2. Nortel
3. Extreme (tie)
3. Foundry (tie)
5. 3Com (tie)
5. Hewlett-Packard (tie)

Table 2. Q3 2004 U.S. Modular LAN Switch Market Share Rankings
1. Cisco
2. Foundry
3. Hewlett-Packard (tie)
3. Nortel (tie)
5. Enterasys

This 103 page report containing 60 worldwide market share tables is available for purchase at www.srgresearch.com.

Synergy Research Group (SRG) is a market research firm, that specializes in quarterly market analysis, market share, forecasting, and strategic consulting. SRG offers a wide breadth of market research services to the equipment manufacturing, semiconductor, and financial communities. Synergy can be found at www.srgresearch.com.

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The contents of this press release represent SRG’s interpretation and analysis of statistics and information collected from authorized company representatives, industry sources, and SRG estimates. SRG does not guarantee the accuracy or completeness of the statistics or information contained in this release.