IDC's Worldwide Quarterly Ethernet Switch and Router Tracker Shows Healthy Growth in the Ethernet Switch Market, Weakness in the Router Market
04 Sep 2014
Worldwide Ethernet Switch Market Increased 6.2% Year Over Year in Second Quarter of 2014
FRAMINGHAM, Mass., September 4, 2014 – Worldwide revenues in the Ethernet switch market (Layer 2/3) reached $5.7 billion in the second quarter of 2014 (2Q14), representing an increase of 6.2% year over year and 8.1% quarter over quarter. Meanwhile, worldwide router market revenues declined -4.0% year over year despite growing 7.6% sequentially over the seasonally weak 1Q14, according to the International Data Corporation (IDC) Worldwide Quarterly Ethernet Switch and Router Tracker.
From a geographic perspective, the Ethernet switch market saw its highest growth in Asia/Pacific (excluding Japan)(APeJ), which had strong year-over-year growth of 21.0% in 2Q14. This growth was due to exceptional results in China (up 40.2% year over year) and India (up 29.3%) that more than offset the market weakness in Thailand and Indonesia, which both experienced double-digit year-over-year declines in 2Q14. Latin America also experienced strong growth in the Ethernet switch market, growing 18.7% year over year with Argentina, Peru, and Brazil leading the way. Western Europe saw its best performance since 3Q10 with a 13.9% year-over-year increase in 2Q14, showing the potential for a solid rebound after years of difficult macroeconomic conditions putting pressure on investments. On the other hand, Central & Eastern Europe (CEE) declined -16.3% year over year in 2Q14 as political unrest in Ukraine took its toll. Ukraine declined -31.7%, while Russia was down -17.5% year over year in 2Q14. However, relative market weakness was not limited to CEE. Japan declined -4.3% year over year and North America was down -0.7% year over year, as both regions significantly underperformed the overall market.
"The worldwide Ethernet switch market saw strong growth as a result of continued gains in 10GbE and 40GbE port shipments, especially in the datacenter, and with some regions and countries really outperforming over recent historical trends," said Rohit Mehra, Vice President, Network Infrastructure at IDC. "The GbE market also did well in terms of shipments in 2Q14, showing its ongoing importance across the enterprise at the network edge, as well as in providing the underlying network platform on which enterprise WLANs are being deployed."
10Gb Ethernet switch (Layer 2/3) revenue increased 7.8% year over year to reach $2.2 billion while 10Gb Ethernet switch port shipments grew a strong 23.0% year over year to reach 6 million ports shipped in 2Q14. 40Gb Ethernet continues to expand as a stand-alone segment and now accounts for more than $323 million per quarter in revenue. 10Gb and 40Gb Ethernet continue to be the primary driver for revenue growth in the overall Ethernet switch market.
The worldwide router market declined -4.0% year over year in 2Q14 with varied results across the key segments within the market. The service provider segment declined -0.9% year over year while the enterprise segment was down -12.4% year over year. The router market also saw varied results on a regional basis. Japan and Latin America registered the best performance in 2Q14 with year-over-year growth in excess of 7%. The Middle East & Africa region grew 4.6% year over year and Western Europe added 1.7% growth in 2Q14. APeJ finished the second quarter flat, while North America (down -11.5% year over year) and CEE (down -6.0%) effectively dragged the overall market lower in 2Q14.
From a vendor perspective, Cisco's Ethernet switch (Layer 2/3) revenue increased 1.5% year over year in 2Q14 but Cisco's market share dipped below 60% for the first time to 59.8% in 2Q14. This was down from 60.5% in 1Q14 and 62.6% in 2Q13. Cisco's market share in the fast growing 10GbE market segment was 61.3% in 2Q14, down from 67.6% in 2Q13. Cisco's service provider and enterprise router revenue declined -13.3% year over year this quarter.
HP's Ethernet switch revenue increased 11.9% year over year and 18.2% quarter over quarter in 2Q14, significantly ahead of the overall market. HP's market share now stands at 10.0% in 2Q14, up from 9.1% in 1Q14 and up from 9.5% in 2Q13.
Juniper also had a strong quarter, outperforming the overall market in both Ethernet switching and routing. Its router revenue was up 5.2% year over year and its Ethernet switch revenue saw a very healthy increase of 26.0% year over year.
"With growth in cloud deployments and increasing demand from datacenters across the globe, 10GbE and 40GbE Ethernet will continue to drive the Ethernet switch market," said Petr Jirovský, Research Manager in IDC's Networking Trackers Group. "However, vendors should be attuned to differences in market dynamics across the regions."
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The IDC's Worldwide Quarterly Ethernet Switch and Router Tracker provides total market size and vendor shares for the Ethernet switch and router technologies in an easy-to-use 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 58 countries. The Ethernet switch market is further segmented by speed (100Mb, 1000Mb, 10Gb, 40Gb), product (fixed managed, fixed unmanaged, modular), and layer (L2, L3, L4-7). Measurement for the Ethernet switch market is provided in vendor revenue, customer 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, customer value, and unit shipments.
For more information about IDC's Worldwide Quarterly Ethernet Switch and Router Tracker, please contact Kathy Nagamine (firstname.lastname@example.org).
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