If ever one desired to know the state of the economy, especially in an emerging economy like ours, all one has to do is take a look at the growth of the networking product segment. Since, IT spend is critical for any organization be it financial or manufacturing, the upswing or downswing of the market can tell a story as pertinent as those told by the various analysts firms and researchers. Thus, in many ways, networking products segment is the barometer of the health of the overall economy.

First up, the overall market has registered a fairly decent increase, grown over the last year by 25% and is currently worth around Rs 7,000 crore. Switches and routers continue to dominate, with both accounting for some 59% of the market. Structured cabling and wireless LANs or WLANs are the fastest growing segments among all, while modems continue to shrink over the year. Cisco continues to lead the market, and there is no company that gives direct competition to Cisco across the various segments in which it operates. Only Juniper has registered a higher growth than Cisco in the router segment, and with the launch of its switches, it intends to give some more headache to the networking giant. A few other in competition are 3Com in the switches market and Netgear in the WLAN space.

Though the market might have grown by 25% or so, a look at last years DQTop20 and the growth suddenly does not seem all that great. In fact, comparing this years growth with that of last year shows that there has been a discernible slow down. Last year the overall market had grown by some 32%, as compared to this years 25%. This could be reflective of the investment by the enterprise segment, especially the banks and the MNCs. There have been reports of how the slowdown is affecting the Indian economy, especially in the financial sector that is shying away from further investments. With the oil prices touching stratospheric levels, the manufacturing sector is reeling as well.

D-Link has been the underperformer in almost all segments except WLAN, registering static or negative growth.

SMB Lifeline
The succour came from the SMBs. In fact, over the years, the networking companies have realised the potential of the small and medium business sector and attuned their strategies to target this sector. According to a survey conducted by New York-based Access Markets International (AMI) Partners, SMB outfits in India are all set to splurge $9.7 bn on IT in 2008.The spend is increased by 22% of what it was last year. This is the result of a boom in the overall economy and a rise in the number of Small Businesses (SBs). Thus while there bigger cousins are shying away from making IT investments, SMBs are spending on it. Little wonder that most of the companies are either strengthening their dealer network or introducing products at a price point much lower than the others.

For instance, in the year gone by, Cisco launched a major branding initiative, the human network, that is specially targeted at the SMBs. India is among the select few markets where this campaign has been launched. Company officials from all the companies agree that the sector is the fastest growing one and among the most profitable one. According to estimates, SMBs currently accounts for anything from 30-40% of the total market spend and are ramping up fast. Small Businesses this year. SBs are adopting the latest Internet-related technologies now63% of Internet-owning SBs are broadband-enabled.

Routers: Top Players
Rank	Company	Revenue (in Rs crore)		Growth (%)
		FY 08	FY 07
1	Cisco	1,444	1,164	24
2	Juniper	192	152	26
3	DAX	55	53	4
4	BA System	12	NA	NA
5	D-Link	7	10	-30
6	Others	100	58	72
	Total	1,810	1,437	26
Source: DQ estimate
Source: DQ estimate
To be able to better challenge Cisco, the competing companies are resorting to price-cuts and launching newer tech routers. For instance, Juniper launched routers capable of supporting 100G interface. Meanwhile, D-Link has launched Business Gateway series priced appropriately for the SMBs

Intelligent Routers
Traditionally, routers have been treated as devices that sit on the server room, distributing bandwidth among the various users. With increasing corporatization and the spread of Internet connectivity, companies are going in for routers that not only do the most basic of the function, as mentioned above, but also offer a lot more.

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