Intel (INTC) Industry Analysis

Industry Analysis The Data Networking Equipment industry generates $52.6 billion in annual revenues. It comprises companies that provide switching, routing, wireless LAN, IP telephony and application delivery services. Credit Suisse estimates that the networking industry grows nearly 4.2% on average every year. Switching $23.7 billion Routing $13.7 billion WLAN Application Delivery $7.9 billion $1.1 billion IP Telephony $7.1 billion Data Networking Equipment Industry (By Revenues) IP Telephony 13% Application Delivery 2% Switching WLAN 15% 44% Routing 26% Switching & Routing Industry Switches Industry - Market Share of Switch Layer Types (In Terms of Revenues) L4-7 7% L2-3 93% L2-3 CAGR FY12-17: 3.7% - Revenues to reach $25 billion by 2017, from $21 billion in 2012 Switches are also classified according to speed. For example, a 10GB switch is able to transfer data at the rate of 10 billion bits per second to another communication device. With the increase in data traffic and connected devices, higher speed switches will experience rapid growth in demand. 10GB switches currently have a low adoption rate of 6% as per Infonetics, but is expected to rise to 25% by 2017 owing to growth in video and voice traffic. Switches Industry - Market Share of Switch Speed Types (In Terms of Revenues) 40GB 100MB 1.3% 8.2% 10Gb 33.9% 1Gb 56.6% Routers Industry - Market Share by Product Class (Revenue) Small Office/Home Office 4.7% Low-End 10.3% Mid-Range 7.4% High-End 77.6% Trends Growth in the Data Networking Equipment industry is driven by various trends in the broader IT industry. A few of the most prominent trends include: Virtualization The process of creating a virtual resource that mimics or acts as an actual physical resource. Virtualization is gaining significant market share, as it reduces the need for hardware resources and cuts costs significantly. Basing servers on virtual machines is one example of virtualization. Shipments of server virtualization machines are growing at an annual rate of 15%. Server Virtual Machine Shipments 25,000 20,000 15,000 10,000 5,000 2009 2010 2011 2012 2013E 2014E 2015E Source: Barclays Research Cloud Computing Cloud computing is a model for delivering tech services in which online resources are retrieved through web-based tools and applications. Cloud computing allows users access to information as long as they have access to the web. By using the cloud, users are able to minimize the cost of maintaining their own hardware and software, since these are provided by the cloud service provider through its own centralized systems. Big Data: Big data refers to the deluge of data generated by blogs, videos, tweets, emails, transactions, etc. Big data has three main characteristics: high volume, high velocity and high variety. Bring Your Own Device (BYOD): BYOD is a model that lets employees bring their personal devices to work, which they to access company resources and information. However, with an increase in the number of connected devices, security concerns and data management become critical concerns for companies. use Software Defined Networking (SDN): SDN allows control over data transportation through software instead of hardware. In short, it allows network administrators to set data routing priorities according to their own judgment. Key Players Cisco offers a wide range of products that cater to both high and low-end markets. The range of its product offerings allows customers the choice to build an entire network using Cisco products only. Additionally, Cisco's ability to provide equipment and services worldwide makes it a preferred choice for customers. Router Industry - Market Shares by Revenues Alcatel-Lucent 13% Others 6% Cisco 53% Juniper 15% Huawei 10% Hewlett-Packard 1% Ericsson 2% Switches Industry - Market Share by Revenues Alcatel Lucent Brocade 3% Juniper 2% Others 16% Huawei 2% HewletPackard 9% F5 3% D-Link 1% Dell Cisco 59% 2% Citrix 1% Key Metrics Cisco (CSCO) Alcatel-Lucent (ALU) Hewlett- Juniper Networks Packard (HPQ) (JNPR) Market Cap $114.2bn $5.8bn $10.3bn $49.8bn Revenues $48.61bn $18.81bn $4.47bn $115.57bn (ttm) EPS (ttm) $1.86 $1.41 $0.58 -$1.62 Revenue Growth 6.68% -1.59% 9.6% 1.66% (3 Year) Operating Margins (Latest Year) 11.24% -11.5% 7.1% -9.2% SOURCES: Company Data, SEC filings, Bloomberg Professional Services BIDNESS Etc. DISCLAIMER: Bidness Etc(TM) and related marks are owned by Bidness Etc. Any other trademarks appearing on this website are the property of their respective owners, and are not used to indicate the origin of goods or services offered or provided by Bidness Etc herein or to suggest approval for or affiliation with Bidness Etc. Thousand Units