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Managed switches ‘will take market share from routers’

05 November, 2013

The share of the industrial communications market held by traditional standalone industrial routers is set to decline over the coming five years as sales of managed Ethernet switches rise, according to a new report by the analyst IHS.

In the past, standalone routers were used to interface networks over long distances, often via the Internet, providing the ability to link systems globally. Increasingly, however, Layer 3 switches are reaching the market that can perform the same routing functions. Most managed switches used to date in industrial networking have only Layer 2 functions and cannot be used for routing.

“The way networks are constructed is changing,” says senior IHS automation analyst, John Morse. He expects most of the changes to be at the controller-to-controller and enterprise levels, particularly where networks are being linked together. “These can be right next to each other or on the other side of the world,” he points out.

IHS is forecasting far higher growth rate rates for Layer 3 managed switches than for standalone routers over the period to 2017. It says that several drivers are behind this trend, of which cost is the most significant. A typical network will comprise many elements, including both managed and unmanaged switches. By including a Layer 3 switch, the network has a gateway to wide-area networks, including the Internet. Such a structure avoids the need for a separate router.

Predicted global revenue growth rates for industrial communications components
Source: IHS

As well as the cost savings resulting from reduced component counts, system designers will also be able to make use of the expanded functions that managed switches can provide, such as monitoring, data collection and port priority settings.

While most suppliers of industrial Ethernet equipment recognise the slower growth of router sales, they believe these devices will continue to have a place in modern industrial networks for the foreseeable future. IHS expects sales of routers to stay at a steady, low level for the next few years, while global sales of Layer 3 managed switches head towards $1bn.

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