Global Ethernet switch, router markets fell in Q1: IDC

June 5, 2020
According to the latest research from IDC, the worldwide Ethernet switch market fell 8.9% year-over-year, and the worldwide router market dropped 16.4%, in 1Q20.

According to the latest research from IDC, the worldwide Ethernet switch market recorded $6.16 billion in revenue in the first quarter of 2020 (1Q20), a decrease of 8.9% year over year. Meanwhile, worldwide total enterprise and service provider (SP) router market revenues fell 16.4% year over year in 1Q20 to $2.99 billion.

The analyst says a variety of factors led to the weakening of these markets across the globe. Despite the Ethernet switch market growing 2.3% for the full year 2019, in the fourth quarter of 2019 the market fell 2.2%, indicating that the market's slow end to 2019 spilled into 1Q20. IDC says the first quarter of 2020 was also impacted by the COVID-19 pandemic that swept across the world throughout the quarter, specifically disrupting supply chains while weakening customer demand.

The analyst expects the negative impact of COVID-19 on both the Ethernet switch and router markets to continue in the second quarter of 2020.

Ethernet switch market highlights

From a geographic perspective, IDC reports that the 1Q20 Ethernet switch market saw mixed results across the globe. According to the analyst, the Middle East and Africa (MEA) region declined 2.9%, with Saudi Arabia's market off 12.7% year over year. Across Europe, growth was uneven. The Central and Eastern Europe (CEE) region grew 3.7% compared to a year earlier, with Russia up 23.2% year over year. The Western Europe market fell 12.9% with Germany losing 10.6% year over year and the United Kingdom off 18.4% from a year earlier.

The Asia/Pacific region (excluding Japan and China) (APeJC) declined 7.0% year over year, with India off 11.3% and Australia declining 16.2% year over year. The People's Republic of China was down 14.6% year over year while Japan was relatively flat with a 0.1% increase compared to the first quarter of 2019. The Latin American market dropped 9.7% year over year, while the market in the United States declined 8.7% annually and Canada fell 7.2% year over year.

"Weakness in the Ethernet switch and routing markets at the end of 2019 continued into the first quarter of 2020, which was exacerbated by the onset of the novel coronavirus and subsequent lockdown of economies around the globe as 1Q20 progressed," commented Brad Casemore, research vice president, Datacenter and Multicloud Networks, at IDC. "Meanwhile, diverging trends intensify in the Ethernet switch market as hyperscale and cloud providers invest in greater data center scale and higher bandwidths while enterprises continue to refresh campus networks with lower-speed switch ports," Casemore added.

IDC notes that growth in the Ethernet switch market continues to be driven by the highest speed switching platforms. "For example, port shipments for 100Gb switches rose 52.1% year over year to $5.5 million," states the analyst. The summary of the new research adds: "100Gb revenues grew 9.9% year over year in 1Q20 to $1.28 billion, making up 20.8% of the market's revenue. 25Gb switches also saw impressive growth, with revenues increasing 58.9% to $482.9 million and port shipments growing 67.7% year over year."

The research found that lower-speed campus switches, a more mature part of the market, saw mixed results in port shipments and revenue, as average selling prices (ASPs) in this segment continue to decline. IDC notes that 10Gb port shipments rose 3.9% year over year, but revenue declined 21.4%. The analyst says that 10Gb switches make up 24.8% of the market's total revenue. For their part, revenues for 1Gb switches declined 3.8% year over year in port shipments and fell 11.9% in revenue. 1Gb now accounts for 39.0% of the total Ethernet switch market's revenue, states the research.

Router market highlights

According to IDC, the worldwide enterprise and service provider router market decreased 16.4% on a year-over-year basis in 1Q20, with the major service provider segment, which accounts for 75.1% of revenues, decreasing 16.8% and the enterprise segment of the market declining 15.3%.

From a regional perspective, the analyst found that the combined service provider and enterprise router market fell 29.4% in APeJC [Asia/Pacific excluding Japan and China]. Japan's total market grew 8.4% year over year and the People's Republic of China market was off 10.9%.

Meanwhile, revenues in Western Europe declined 23.5% year over year, while the combined enterprise and service provider market in the CEE region declined 17.1%. The MEA region was down 5.2%.

In the U.S., the enterprise segment was down 12.2%, while service provider revenues fell 19.6%, giving the combined markets a year-over-year drop of 17.5%. Finally, the Latin America market declined 15.9% on an annualized basis, reports IDC.

"Results in the Ethernet switch and routing markets were fairly consistent across geographies, indicating the widespread impact the coronavirus has had on both markets across the globe," noted Petr Jirovsky, research director, IDC Networking Trackers. "At the end of 2019, a variety of factors contributed to economic uncertainty, including tensions related to the US-China trade war, Brexit being finalized, and then in the first quarter of 2020, the novel coronavirus. While results from some countries have been mixed in 1Q20, the dynamics across these markets will continue to evolve significantly in the near term. IDC will monitor these trends and their impact across all geographies and segments of these markets."

Among the top vendors' highlights for the worldwide Ethernet switch and router markets for the quarter, IDC reports that:

  • "Cisco finished 1Q20 with a 12.0% year-over-year decline in overall Ethernet switch revenues and market share of 51.9%. In the hotly contested 25Gb/100Gb segment, Cisco is the market leader with 39.8% of the market's revenue. Cisco's combined service provider and enterprise router revenue declined 28.1% year over year, with enterprise router revenue decreasing 18.7% and SP revenues falling 33.8%. Cisco's combined SP and enterprise router market share stands at 36.3%."
  • "Huawei's Ethernet switch revenue declined 14.0% on an annualized basis, giving the company a market share of 8.4%. The company's combined SP and enterprise router revenue declined 2.1% year over year, resulting in a market share of 28.8%."
  • "Arista Networks saw its Ethernet switch revenues decline 18.7% in 1Q20, bringing its share to 6.7% of the total market. 100Gb revenues account for 73.7% of the company's total revenue, reflecting the company's longstanding presence at hyperscalers and other cloud providers."
  • "HPE's Ethernet switch revenue increased 6.7% year over year, giving the company a market share of 6.2%, up from 5.3% market share the same quarter a year earlier."
  • "Juniper's Ethernet switch revenue rose 14.1% year over year in 1Q20, bringing its market share to 3.3%. Juniper saw a 16.0% decline in combined enterprise and SP router sales, bringing its market share in the router market to 10.5%."

The market research results were published in the IDC Quarterly Ethernet Switch Tracker and IDC Quarterly Router Tracker reports.

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