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IHS: Managed switches to impede stand-alone routers' growth

12 Nov 2013

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The increasing adoption of layer 2 and 3 managed switches will likely drag down the revenue market share of stand-alone industrial routers over the next five years, the IHS said in its latest report on the Ethernet components industry. Data analysed by the research firm show an almost lateral movement in stand-alone routers' global component revenue from 2011 to 2017, compared to layer 2 switches, whose revenue is expected to increase from roughly $600 million in 2011 to more than $1 billion by 2017. The trend will be driven primarily by cost and expanded product functionality.

Stand-alone routers that have been traditionally used to interface networks over the Internet are now being rivalled by layer 3 switches. To date managed switches are used more often in industrial networking, but most have only Layer 2 functionality and cannot be used as a result for routing. "Most of the changes are forecast to be at the controller-to-controller and enterprise levels, particularly where networks are being linked together," IHS senior automation analyst John Morse said.

Cost will be the main determinant of industrial routers' future in the market, according to IHS. Compared to networks with a separate router, structures with a layer 3 switch will need fewer components since they have a gateway to wide-area networks, including the Internet. IHS also predicts that system designers will switch from stand-alone routers to managed switches because of their expanded product functionality, particularly in terms of monitoring, data collection and port priority.

Despite slower router sales growth, suppliers for the industrial Ethernet components market believe these devices will remain relevant in future modern industrial networks, according to the report.

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