Research firm IDC released Friday data on the global Ethernet switch market (Layer 2/3) that recorded US$7.32 billion in revenue in the third quarter of 2019, an increase of 0.1 percent year over year. Meanwhile, worldwide total enterprise and service provider (SP) router market revenues grew 0.8 percent year over year in the third quarter this year to $3.74 billion. These results were published Friday in the International Data Corporation (IDC) Worldwide Quarterly Ethernet Switch Tracker and Worldwide Quarterly Router Tracker.
The Worldwide Quarterly Ethernet Switch Tracker and the Worldwide Quarterly Router Tracker provide total market size and vendor shares for the Ethernet switch and router technologies in an Excel pivot table format. The geographic coverage for both the Ethernet switch market and the router market includes eight major regions (USA, Canada, Latin America, Asia/Pacific (excluding Japan), Japan, Western Europe, Central and Eastern Europe, and Middle East and Africa) and 60 countries.
The Ethernet switch market is further segmented by speed (100Mb, 1000Mb, 10Gb, 25Gb, 40Gb, 50Gb, 100Gb), product (fixed managed, fixed unmanaged, modular), and layer (L2, L3, ADC). Measurement for the Ethernet switch market is provided in vendor revenue, value, and port shipments. The router market is further split by product (high-end, mid-range, low-end, SOHO), deployment (service provider, enterprise), connectivity (core, edge), and the measurements are in vendor revenue, value, and unit shipments.
From a geographic perspective, the third quarter of this year Ethernet switch market delivered mixed results across the globe. The Middle East and Africa region grew 9.3 percent with the region's largest market, the United Arab Emirates, growing 6.9 percent year over year while Israel's market grew 18.8 percent. Across Europe, growth was stagnant.
The Central and Eastern Europe (CEE) region lost 9.0 percent compared to a year earlier with Russia dropping 13.9 percent year over year. The Western Europe market fell 6.1 percent with Germany losing 5.6 percent year over year. Denmark was a bright spot in the region with 18.6 percent year-over-year growth.
The Asia/Pacific (excluding Japan) (APeJ) region grew 1.3 percent year over year. In China, the market grew 4.6 percent year over year while the Philippines rose 25.9 percent. Japan was off 3.8 percent compared to its growth in the third quarter last year. In Latin America, the market dropped 4.4 percent year over year, while the U.S. market grew 2.6 percent annually and Canada declined 4.9 percent year over year.
"The over-arching trend driving both the Ethernet switch and router markets continues to be enterprise, communications service provider, and cloud SP investments in agile cloud connectivity to meet the needs of their business and customers," said Rohit Mehra, vice president, Network Infrastructure at IDC. "The demand for higher speeds across a range of network connectivity options will spur growth in these markets in the coming years as bandwidth needs increase and mission-critical applications demand even lower latencies."
Growth in the Ethernet switch market continues to be driven by the highest-speed switching platforms. For example, port shipments for 100Gb switches rose 57.2 percent year over year to 5.6 million. 100Gb revenues grew 32.8 percent year over year in the third quarter this year to $1.44 billion, making up 19.6 percent of total market revenue compared to 14.8 percent a year earlier.
25Gb switches also saw growth with revenues increasing 69.3 percent to $463.4 million and port shipments growing 68.0 percent year over year. Lower-speed campus switches, a more mature part of the market, saw moderate growth in port shipments but declining revenue, pointing to a decrease in average selling prices (ASPs).
10Gb port shipments rose 7.9 percent year over year, but revenue declined 8.7 percent to deliver 26.3 percent of total market revenue. 1Gb switches grew 3.9 percent year over year in port shipments but declined 7.4 percent in revenue. 1Gb now accounts for 39.2 percent of the total Ethernet switch market revenue.
The worldwide enterprise and service provider router market increased 0.8 percent on a year-over-year basis in the third quarter this year with the major service provider segment, which accounts for 75.5 percent of revenues, decreasing 0.1 percent and the enterprise segment of the market growing 3.6 percent.
From a regional perspective, the combined service provider and enterprise router market fell 1.5 percent in APeJ with the enterprise segment growing 1.5 percent and the service provider segment declining 2.2 percent year over year. Japan's total market grew 3.9 percent year over year.
Revenues in Western Europe were off 7.3 percent year over year while CEE revenues for the combined enterprise and service provider market grew 3.5 percent year over year. The Middle East & Africa region was up 8.9 percent. In the U.S., the enterprise segment was up 7.3 percent while service provider revenues grew 1.8 percent, giving the combined markets 3.2 percent year-over-year growth. In Latin America, the market grew 11.7 percent.
Cisco finished the thrid quarter this year with a 5.6 percent year-over-year decline in overall Ethernet switch revenues and market share of 51.3 percent. In the hotly contested 25Gb/100Gb segment, Cisco was the market leader with 38.2 percent revenue share. Cisco's combined service provider and enterprise router revenue declined 10.6 percent year over year with enterprise router revenue increasing 3.4 percent and SP revenues falling 18.1 percent. Cisco's combined SP and enterprise router market share increased to 37.9 percent, up from 36.8 percent in the second quarter of this year.
Huawei's Ethernet switch revenue rose 4.4 percent on an annualized basis, giving the company market share of 8.9 percent. The company's combined SP and enterprise router revenue rose 20.6 percent year over year, giving the company a market share of 28.1 percent.
Arista Networks saw Ethernet switch revenues increase 14.3 percent in the third quarter, bringing its share to 7.6 percent of the total market, up from 6.6 percent a year earlier. 100Gb revenues accounting for 68.8 percent of the company's total revenue, indicating the company's focus on hyperscale and cloud providers.
HPE's Ethernet switch revenue declined 7.0 percent year over year, resulting in overall market share of 5.3 percent.
Juniper's Ethernet switch revenue rose 4.5 percent year over year in the third quarter this year, bringing its market share to 3.2 percent. Juniper saw a 17.9 percent decline in combined enterprise and SP router sales, bringing its market share in the router market to 10.9 percent.
"Dynamics in the Ethernet switch and routing markets continue to evolve," said Petr Jirovsky, research director, IDC Networking Trackers. "In Ethernet switching, the seemingly insatiable demand for higher-speed networking platforms continue to drive investments. Meanwhile, lower-speed campus switching continues to moderate as enterprises build out connectivity platforms to support mobile workers and the Internet of Things. In the routing segment, the enterprise continues to buoy the broader market as enterprises and service providers augment their networks to support improved cloud connectivity."
