Both enterprises and service providers are opening up their wallets for network equipment and they will keep spending until at least until 2010, according to Infonetics Research.
Sales of both telecommunications and data-network gear rose 9% in 2006 from the previous year, the company reported to £61.5bn worldwide, with a further 20% rise to £74bn likely by 2010, Infonetics said.
Carriers and corporations alike are investing because they want to add voice and multimedia applications traffic to data networks, according to the research house. Enterprises are also starting to add advanced capabilities for security and traffic management. New multimedia web applications, particularly streaming video, have been cited in burgeoning internet traffic.
IPTV (Internet Protocol television) will play a growing role in the buildout, Infonetics predicted. IPTV equipment will double its share of the total networking market between 2006 and 2010, the researchers said.
IMS (IP Multimedia Subsystem), a technology to deliver the same services over different kinds of networks, will be another fast-growing field.
A growing networking industry does not necessarily mean an expanding vendor base, however. Infonetics' report came just as Avici Systems, launched in 1997 as one of several would-be rivals to Cisco, closed down its routers business.
Avici and others hoped to take a chunk of the market for big routers that sit at the core of service-provider networks and have to be installed or expanded as traffic gets heavier. Cisco and Juniper Networks dominate that market today.
In the total world telecommunications and data-networking market studied by Infonetics, Cisco is the biggest vendor with 20%, followed by Alcatel-Lucent.
The fastest growth in spending is happening in the Asia-Pacific region, which made up 28% of worldwide revenue in 2006. Meanwhile, 32% was from Europe, the Middle East, and Africa, 30% was from North America, and 10% of spending came from Central American and Latin America.