Gateways knocking out DSL modems, says Yankee

The Yankee Group says there is turbulence ahead in the DSL modem market, as residential gateways that can connect multiple computers take hold in the market place.

As both businesses and consumers become more interested in sharing broadband connections, access equipment that incorporates a DSL modem and a router will dominate the market by 2009, outselling simple modems by more than three times, Yankee is forecasting. The research and consulting firm foresees turbulence in the DSL access market as modem shipments slump, and sales shift to gateway devices that are multi-functional.

The latest Yankee forecast predicts a dramatic decline in DSL modem revenue from $1.6 billion in 2005 to just over half a million in 2009. in that same time period, residential gateway revenue should grow from $3.9 billion in 2005 to $3.9 billion in 2009, according to analyst Nicole Klein.

The entire segment may be under revenue pressure, however, as homes and businesses require only one gateway, limiting revenue opportunity. Klein is advising service providers to deploy gear that can serve multiple applications, such as Voice over IP, and be upgraded via software downloads to prevent the need for customer disruption.

In North America, Siemens and Westell are the market segment leaders, although 2Wire is posting strong numbers, Klein said. Siemens and Thomson lead the European market, while NEC, Ambit and ZyXEL are leaders in Asia PAC, which makes up one-third of the global market.