Increased internet usage will drive demand sharply, so prices are forecast to rise steadily in the next three years.
Los Angeles, CA (PRWEB) September 22, 2014
Network routers have a buyer power score of 3.5 out of 5, indicating that buyers have slight leverage over suppliers in this market. Buyers benefit from favorable pricing trends and low market risks, but the market's high level of concentration significantly lowers the buyer score. “Pricing trends have been favorable for buyers,” says IBISWorld procurement analyst Andrew Yang. “Routers require a wide variety of semiconductors, computer chips and microprocessors, and prices for these inputs have steadily declined.” As a result, suppliers have saved costs in the production process and passed on these savings to buyers in the form of lower prices.
In the three years to 2014, prices for network routers are estimated to decline slightly with low volatility. However, as the economy improves and companies have increased access to the internet, demand is expected to increase significantly, giving suppliers leverage to raise prices. As a result, buyers should take action to lock in prices now. “Buyers also benefit from low market risks,” adds Yang. “Many router suppliers have seen healthy revenue growth and high profit margins, and most face a relatively low chance of bankruptcy.” Supply chain risks are also low because most suppliers are global companies that have well-established supply chains to procure the inputs that they need to manufacture network routers. As a result, buyers can expect reliable and steady access to routers.
However, certain factors limit buyer power. As use of and access to the internet increases, routers are becoming a more necessary requirement for most large organizations. Currently, there are no viable substitutes that can perform the same functions as a router. This increases buyers' dependence on router suppliers to provide internet connectivity for their employees. Additionally, market share concentration is high, resulting in a limited number of suppliers for buyers to choose from. The largest supplier, Cisco, owns a very large share of the market by revenue. As such, buyers may have to accept prices set by suppliers. It is also important to keep in mind that routers must be deeply integrated with the buyer's existing networking products and software programs, which raises potential switching costs and the risk of getting locked in with a supplier. For more information, visit IBISWorld’s Network Routers procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to help buyers of network routers, more commonly referred to as simply “routers.” Routers allow data and information to be transferred from one network to another. They are typically used to connect many computers to a modem at the same time, thus providing internet access to multiple users at once. This report focuses on business-class routers for medium to large businesses with more than 50 employees. Business-class routers come with multiple features that allow for increased security, access and management. This report excludes consumer-grade routers as well as modems, network firewalls and switches.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.