Network switch buyers rejoice--a price war is imminent

Twelve months ago Ethernet switches cost around $1000 per port; now they're down to $200 per port and vendors are planning further reductions.

A switch price war is looming. Twelve months ago Ethernet switches cost around $1000 per port; now they’re down to $200 per port and vendors are planning further reductions even as I write.

Last year switch manufacturers were still building the cost of R&D into the price of their products but now that Ethernet switching is a mature technology, the competition is on to see who can build and deliver the cheapest technology.

At the low end of the market in particular, prices are approaching manufacturing cost. Networking vendors are slashing the price of current products and also bringing out new products at ever cheaper prices.

Particularly feisty in New Zealand is privately owned Californian hub vendor Allied Telesyn, which is currently selling its 16-port workgroup switch, the ATI3617, for $279 per port.

A private manufacturer best known for semiconductors and transceivers, Allied Telesyn is betting on plenty more growth in the entry-level market.

“Most people are under-using IT and networking vendors are still only tapping into 20% of the market,” says Stephen McLoughlin, Allied Telesyn’s sales manager for Australia/New Zealand. “Forget about advanced capabilities like RMON and Fast Ethernet--the average network in New Zealand is only 16 nodes running unmanaged shared Ethernet hubs. However, the market is changing--unmanaged hubs are about 60% of hub sales at the moment but I predict that by the end of next year they will have dropped to 50%. In the meantime the switched Ethermet market has plenty of room for expansion.”

Allied Telesyn distributor Liam Venter, of Auckland-based Lan1, says Allied Telesyn’s aim is to undercut low-end switch market leader 3Com. 3Com’s product directly comparable to the ATI3617 is the 3ComLink switch 1000, 24-port 3c16900 for $214 per port; and the 3ComLink switch 1000, 12-port 3c16901 for $343 per port. (Note that the more ports on a switch, the lower the price. Most analysts advise to allow for 30% expansion per year for your network but don’t buy any more ports than this. After all, with the way prices are falling, it will be cheaper to buy new equipment when the time comes to expand even further.)

“Allied Telesyn is pitching head to head with 3Com, but because Allied Telesyn is a small company with a relatively low profile we are aiming to come in at $5 to $10 cheaper per port.”

Allied Telesyn has its work cut out, with 3Com just announcing a new desktop switch, the SuperStack II, priced at $177 per port. The 24 port SuperStack II Desktop Switch is priced at $4637 and begins shipping in November.

John Halliwell, managing director of 3Com Australia and New Zealand, says 3Com is taking an aggressive position to maintain market leadership in this sector. It’s a sector well worth controlling, he says.

“We predict that desktop switching will become one of the fastest growing segments in LAN connectivity over the next three years and will exceed all industry expectations.”

Venter says once the SuperStack II is shipping Allied Telesyn will answer 3Com on price.

“Expect Allied Telesyn’s price to come down even further. They will be aiming at below 3Com.”

Lan1 also distributes low-end Cisco products and Venter says Cisco is also looking at reducing the price of its CiscoPro 25 switch by as much as 20% to 30% per port. The CiscoPro is currently $232 per port.

Digital has also joined the fray with a family of inexpensive unmanaged Ethernet switches--including the EtherWorks Switch 8T with eight Ethernet ports for $1619 ($202 per port); the EtherWorks 2TTX, with two 10:100Mbit/sec ports, for $2032; the EtherWorks Switch 6T/2TX with six Ethernet ports and 2 10/100Mbit/sec ports for $4230 ($528 per port); and the EtherWorks Switch 8T/TX for $8055.

Digital networking products are distributed by Sealcorp and Datamatic. All prices are recommended retail price and are exclusive of GST.

(Malcolm is Computerworld’s networking editor. She can be contacted by email at andrea_malcolm@idg.com.)

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