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Global
sales of the core routers that provide the backbone for the
Internet and long-haul telecommunications networks fell 4
percent last year and are set to fall further this year, a
research company said. That decline in sales to $2.4 billion
in 2001 was driven by the economic slowdown, reduced spending
by telecommunications carriers and a saturated market for
long-distance network gear, San Jose, California-based Infonetics
Research said.
The slump in sales was in marked contrast to the boom that
Cisco Systems, Juniper Networks and other makers of core routers
which direct Internet and communications network traffic saw
between 1999 and 2000, when worldwide sales jumped 252 percent,
the company said.
Last year proved more difficult, said Infonetics analyst Kevin
Mitchell, noting that global router sales fell 22 percent
between the third and fourth quarters. The market is certain
to contract further this year as service provider customers
such as Qwest Communications are expected to cut budgets for
network equipment as they work through a glut of inventory,
while bankruptcies at McLeodUSA and Global Crossing will suppress
orders, Mitchell said. Overall capital spending budgets of
service providers fell about 20 percent last year from 2000,
and are expected to drop between 25 percent and 27 percent
this year from 2001, he added.
Capital spending concerns are weighing on network gear makers,
high-flyers during the tech boom on the late 1990s. Many in
recent weeks have said that demand is too uncertain to provide
guidance beyond their current quarters.
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