Computer Networking Equipment Manufacturing Industry Profile

Companies in this industry primarily manufacture equipment used to transmit data across communications networks. Major companies include US-based Brocade Communications, Cisco Systems, Hewlett-Packard, Juniper Networks, and NETGEAR, as well as Alcatel-Lucent (France), D-Link (Taiwan), Fujitsu and NEC (Japan), and Huawei (China).

The global computer networking equipment industry generates more than $100 billion in revenue a year. While production is concentrated in the Asia/Pacific region, emerging markets such as Africa, Latin America, and Eastern Europe offer growth potential for manufacturers.

The US telephone and data communications equipment manufacturing industry, which includes computer networking equipment, generates annual revenue of $9 billion and is expected to grow at a low rate in the next two years. (Although US-based networking equipment vendors generate significantly more than $9 billion in revenue, their manufacturing activities are largely outsourced to companies based elsewhere.) Technological advancements that necessitate network upgrades are a key driver of demand.

COMPETITIVE LANDSCAPE

Demand is driven by economic growth as enterprises and service providers expand networks to meet increasing user needs, and by the superior performance of new equipment, which encourages replacement of existing equipment. Profitability of individual companies depends on timely development and delivery of products in high volumes for large customers. Large companies have advantages in economies of scale in broad product offerings and services. Small companies can successfully compete by designing and developing products that meet highly specialized needs. The industry is ...