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NPU Market Gets Reincarnated -- Intel Now True Market Share Leader, Reports In-Stat/MDR

Posted on: Monday, 9 February 2004, 06:00 CST

In-Stat/MDR, Scottsdale Eric Mantion, 480-609-4535 emantion@reedbusiness.com Kirsten Skedd, 480-609-4534 kskedd@reedbusiness.com

While the Network Processor Unit (NPU) market is not quite where it had hoped to be by now, it still has a very bright future ahead of it, according to In-Stat/MDR (http://www.instat.com). The high- tech market research firm reports that an increasing number of networking protocols, needs for more service-based revenues and a resurgence of the importance of flexibility will keep the NPU markets growing steadily. While 2003 is expected to finish up around $60 million, there is still a strong potential behind remaining NPU makers, and this market is expected to outpace most other silicon markets for the next five years.

"The NPU market has gone through some fairly radical changes. What started as a tiny market, swirling with hype and built around a dozen startups with revolutionary technologies, has now become a sizable market being driven by established chipmakers that are relying on time-tested principles for success," said Eric Mantion, a senior analyst with In-Stat/MDR. "Key among the proven concepts is that, in order for high-intelligence devices to thrive, there must be a complete ecosystem in place. Companies, like Intel and Motorola, are taking lessons learned from other processors and applying them to NPUs. For some companies, like Vitesse and IBM, the effort of creating an ecosystem has proven to be more hassle than it was worth, so they have exited the market."

Mantion noted that one of the most interesting transitions in this market is the move made by Intel from fourth place in the NPU market shares in 2002 to first place in the first half of 2003. "This strong growth by Intel amidst a mostly flat market from 2002 to 2003 exemplifies the importance of having a strong ecosystem around your NPUs," said Mantion. Other companies that gained market share over the same time period were Motorola and Agere. Each company is expected to grow at a healthy rate since they both have ancillary silicon products from which they can gain strength. For example, Motorola can depend on its strong base of PowerQUICC communications processors, which earned more revenue for the company in 2003 than the entire NPU market will reach by 2007.

In-Stat/MDR has also found that:

--With the release of the Advanced Telecom Computing Architecture (AdvancedTCA) standard for chassis by the PCI Industrial Computer Manufacturers' Group (PICMG), merchant silicon, such as NPUs, Traffic Managers, Switch Fabrics and others, can create reference designs that are easier to work with and better understood by various OEMs. It is anticipated that the NPU vendors will leverage this as a tool to reduce the time to market for their customers.

--Not only are OEMs in the United States looking at NPUs again, but there's also been a lot of attention coming from overseas, especially China.

--The NPU makers that will be most successful are the ones that can offer a complete NPU/TM/SF solution, either by themselves or through strong strategic alliances.

--Metro NPUs are just at the beginning of the strong growth phase of their life cycle. Companies in this sector will remain the primary influencers of the NPU market until the Core NPUs enter their growth phase, sometime in 2005.

The report, "The Reincarnation of the Network Processor Market" (#IN030848NT), examines 25 different markets to determine the path that NPUs are most likely to take. Relying on In-Stat/MDR's comprehensive database of equipment forecasts, the report is the most analytical forecast of the NPU market available, providing meticulous projections for each of the major segments. Unlike other NPU reports available, this report is not merely a regurgitation of technical details readily available from vendors, but a detailed exploration of both the technology and drivers behind this market. To purchase this report, or for more information, please visit: http://www.instat.com/catalog/Ncatalogue.asp?id=28 or contact Courtney McEuen at 281-246-4668; cmceuen@reedbusiness.com. The report price is $3,995.

About In-Stat/MDR

In-Stat/MDR (http://www.instat.com) offers a broad range of information resources and analytical assets to technology vendors, service providers, technology professionals and market specialists worldwide. The company stands alone in its ability to integrate both supply-side and demand-side research methodologies into a single comprehensive view of technology markets and products. This capability relies on a unique ability to cover the entire value chain from engineering-level technology, through equipment, infrastructure, services and end users.

In-Stat/MDR is part of the Reed Electronics Group, a division of Reed Elsevier (www.reedelsevier.com), a world-leading publisher and information provider. With more than 38,000 employees worldwide, Reed Elsevier operates in the science & medical, legal, education and business-to-business industry sectors, providing high value and flexible information solutions to professional end users, with increasing emphasis on the Internet.

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