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FY 09 will be remembered as the toughest year for the networking industry with IT and BPO, two of the biggest spenders on networking products, going slow on spending due to the recession. The one glimmer of hope in this downturn was the government sector, which continued to invest, thanks to the increased pace of SWAN implementations across the country. State governments clearly saw the benefit of networking state district headquarters and the progress was an indicator of the shape of things during the fiscal. A look at some statistics from the Ministry of IT makes the picture clearer: States where SWAN implementation was at an advanced stage in FY 09 included Assam, Bihar, Gujarat, Jharkhand, Karnataka, Kerala, Maharashtra, Orissa, West Bengal, Puducherry, Sikkim, and Uttar Pradesh. It was already in progress in Andhra Pradesh, Chhattisgarh, Madhya Pradesh, Jammu & Kashmir, Manipur, and Uttarakhand. FY 09 also saw bid process initiation for SWAN implementation in Arunachal Pradesh, Meghalaya, Mizoram, and Nagaland. Incidentally, some of the leading vendors had maximum growth during FY 09 from this sector.

Education was another vertical which saw good traction for networking products during FY 09. IIMs and IITs, apart from various universities, allocated a reasonable budget towards procuring networking products. Private engineering colleges also continued to comply with AICTE guidelines which requires these technical institutions to have a mandatory network infrastructure in place. Apart from these segments, telecom service providers, particularly the new cellular licensees, were on network infrastructure build out stage. As far as large enterprises were concerned, spending by BFSI remained somewhat subdued, more due to their cautious or wait-and-watch approach rather than the real impact of the global meltdown. The hospitality and logistics sector also contributed to the segments growth. There were some exceptions though. The telecom vertical grew and new and existing licensees set up new offices and expanded their existing ones.

CyberMedia Research  DQ Estimates

Education and government sectors offered some relief to the networking vendors, even as most enterprises reduced their budgets on communications; however, the increasing broadband adoption was a silver lining

A key highlight of FY 09 was that the SOHO users market got a boost with people moving from plain vanilla ADSLs to things like integrated access devices. Users went from being concerned about Internet access to things like Wi-Fi and security as one of their top priorities. This meant a leg up for the networking industry as the broadband user segment became one of the key focus areas for most networking vendors. In terms of small and medium businesses, there was a clear shift towards consumption of layer three products as well as gigabit Ethernet. Another significant trend was VoIP, which became mainstream in the enterprise segment. The slowdown also saw prospective customers doing more due diligence before deciding on any vendor. Manufacturing and retail were also somewhat subdued in their buying of networking products during FY 09.

CyberMedia Research  DQ Estimates

Ciscos domination across all products did not raise eyebrows, but the emergence of a few others were looked at with interest. Juniper consolidated its #2 position in switches, D-Link continued to enjoy SMB allegiance, HP Procurve emerged as a serious player while 3Com staged a comeback

Routers, which traditionally have been used to connect networks, appeared to be heading towards a phase where vendors started enriching them with capabilities other than mere routing. The challenges faced by enterprises on account of increase of number of users and multiplicity of applications coupled with the complexity of transmission of voice, data and video required more intelligent routing and switchingwhich most top vendors were able to address. Security also was a top priority for CIOs, a result of the large number of attacks on Internet networks.

WLAN, unlike routers and switches, saw healthy growth thanks to the enterprises increasing faith on the level of security provided by vendors. The other factor was good notebook penetration among enterprise users.

Green was the underlying theme of most networking vendors, who tried to project products targeting their energy efficiency features. It was not clear whether enterprises really took this seriously, though vendors claim otherwise.

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