Worldwide Ethernet Switch Market and Enterprise and Service Provider Router Market Post Positive Results for the Fourth Quarter and Full Year 2015, According to IDC
08 Mar 2016
Worldwide Ethernet Switch Market Showed Slight Improvement with Growth of 3.2% Year Over Year in Fourth Quarter of 2015; Increased 1.9% for Full Year 2015
FRAMINGHAM, Mass., March 8, 2016 – The worldwide Ethernet switch market (Layer 2/3) exceeded $6.4 billion in revenue in the fourth quarter of 2015 (4Q15), an increase of 3.2% year over year and a healthy increase of 5.1% quarter over quarter. For the full year 2015, the market increased 1.9% over 2014. Meanwhile, the worldwide total enterprise and service provider (SP) router market also improved in 4Q15, growing 4.0% on a year-over-year basis and was up 9.9% quarter over quarter. For the full year 2015, the router market was up 5.6% over 2014. These growth rates are according to results published in the International Data Corporation (IDC) Worldwide Quarterly Ethernet Switch Tracker and Worldwide Quarterly Router Tracker.
From a geographic perspective, the 4Q15 Ethernet switch market performed best in Asia/Pacific (excluding Japan)(APeJ), which increased a solid 10.2% year over year and 14.4% quarter over quarter carried mainly by Singapore (up 32.0% year over year) and South Korea (up 19.7% year over year). For the full year 2015, APeJ rose 4.8%. North America also recorded a strong 4Q15, increasing 8.0% on an annual basis and 6.9% sequentially. The United States was the primary driver of that growth, increasing 8.7% year over year and 7.0% quarter over quarter.
Surprisingly, no other region saw a year-over-year increase in 4Q15. Western Europe was just below flat, decreasing -1.2% year over year in 4Q15, despite improving 7.6% sequentially. Standouts in the region included Ireland (up 48.5% year over year) and Switzerland (up 10.1% year over year). For the full year 2015, Western Europe increased 0.8% over 2014. Latin America also had a poor showing, contracting 2.0% year over year in 4Q15, despite a 35.5% sequential surge. Latin America was down -3.8% for the full 2015. The Middle East & Africa (MEA) region declined -5.1% year over year in 4Q15, although Qatar recorded a healthy 13.7% year-over-year increase. For the full 2015, MEA was up 3.4% over 2014. Central and Eastern Europe continues to see declines, contracting -14.8% year over year in 4Q15 and -18.3% for the full year, despite a 14.9% sequential increase. However, bright spots were seen in the Czech Republic and Hungary, both of which grew 12.4% year over year in 4Q15. Japan is also experiencing continued declines, decreasing -18.1% year over year in 4Q15 and -22.5% for the full year 2015.
"The seasonal fourth quarter spike was alive and well in 2015, helping the market to achieve respectable growth," said Rohit Mehra, Vice President, Network Infrastructure, at IDC. "At the same time, price erosion continues to obscure the rapidly increasing demand for switching infrastructure to meet the explosive needs of cloud and mobility across service provider and enterprise segments. We expect the market to remain competitive as vendors look to new strategies to offset lower average selling prices."
10Gb Ethernet switch (Layer 2/3) was essentially flat year over year, coming in at $2.3 billion while 10Gb Ethernet switch port shipments grew a robust 33.3% year over year with nearly 9.5 million ports shipped in 4Q15 as average selling prices continued to fall. For the full 2015, the 10Gb Ethernet market declined 2.1% year over year, finishing just under $8.6 billion, with shipments increasing 26% over the period. 40Gb Ethernet revenue reached a record $716.4 million in 4Q15, growing 27.6% year over year. For the full year 2015, 40Gb Ethernet finished at $2.44 billion, representing a 48.4% increase over 2014. 10Gb and 40Gb Ethernet are expected to continue to be the primary drivers of the overall Ethernet switch market in the near term as leading vendors and service providers prepare for the introduction of 25/100 GB Ethernet. 1Gb Ethernet switch revenue increased slightly (1.4% year over year) as shipment strength offset continuing price erosion. However, for the full year 2015, 1Gb Ethernet switch revenue declined -0.7% over 2014.
The worldwide enterprise and service provider router market grew 4.0% on a year-over-year basis in 4Q15 with a 3.9% increase in the Service Provider segment and a 4.4% increase in Enterprise routing. This will be a market to watch closely over the coming quarters as software-defined architectures start to take hold across the WAN (e.g. software-defined WAN), enabling enterprise network managers and service providers alike to benefit from these emerging capabilities. For the full year 2015, the worldwide enterprise and service provider router market grew an impressive 6.7% compared to 2014.
The combined enterprise and service provider router market saw a varied regional performance in 4Q15 and for the full 2015. Latin America was by far the best performing region in 4Q15 and for the full year, seeing increases of 21.5% and 19.7%, respectively. MEA followed with 14.2% year-over-year growth in 4Q15 and was up 20.6% for the full year. North America grew at 7.7% year over year and 6.2% for the full year. Western Europe came in at about the market rate in 4Q15 (up 4.1%) and recorded strong full year growth of 8.6%. Despite positive growth for the full 2015 (up 3.7%), APeJ recorded a decline of -2.7% year over year in 4Q15. Similar to the previous quarter, CEE and Japan significantly underperformed in 4Q15, declining -4.9% and -21.59% year over year and -7.8% and -21.1% for the full year, respectively.
Cisco finished the quarter with 1.0% year-over-year growth in the Ethernet switching market and market share of 59.2%, down from its 61.6% share in 3Q15. For the full year 2015, Cisco grew 2.2% and recorded 60.7% market share. In the hotly contested 10GbE segment, Cisco held 56.1% of the market in 4Q15, down from 59.0% in the previous quarter. For the full 2015, Cisco recorded 58.4% share of 10Gb Ethernet revenue, compared to 61.1% in 2014. Cisco's service provider and enterprise router revenue increased 2.1% year-over-year, while increasing 6.0% for the full year.
Hewlett Packard Enterprise's (HPE) Ethernet switch revenue rose 1.0% year over year in 4Q15, while declining -2.0% for the full 2015. HPE's market share stands at 9.2% in 4Q15, slightly up from its 9.0% share in 3Q15. For the full year 2015, HPE declined -2.0% and recorded 9.0% market share.
Juniper had another record quarter in Ethernet switching with a year-over-year increase of 32.0% and sequential growth of 5.8% in 4Q15. For the full 2015, Juniper grew 16.7% in the Ethernet switch market. Juniper also saw healthy router revenue growth in 4Q15: 18.8% on an annualized basis, 4.9% sequentially, and 3.4% for the full year.
Huawei continued to perform well in both the Ethernet switch and the router markets. Huawei's Ethernet switch revenue grew 39.3% year over year in 4Q15 (on the strength of 66.4% sequential growth), while increasing 34.9% for the full 2015. Huawei enterprise and SP router revenue increased 0.8% year over year in 4Q15 and saw a full-year increase of 22.1%.
"We are seeing varied geographic growth trends indicating that regions are in different points of their 3rd Platform journey viz-a-viz network infrastructure," said Petr Jirovsky, Research Manager in IDC's Networking Trackers Group. "The emergence of speeds such as 2.5/5 Gb, 25/50Gb Ethernet, along with 100Gb Ethernet to tackle customer demands around cloud buildouts, IoT, and mobility infrastructure promises an interesting market transition in the coming years."
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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 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 60 countries. The Ethernet switch market is further segmented by speed (100Mb, 1000Mb, 10Gb, 40Gb, 100Gb), product (fixed managed, fixed unmanaged, modular), and layer (L2, L3, L4-7). 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
For more information about IDC's Worldwide Quarterly Ethernet Switch and Router Trackers, please contact Kathy Nagamine (email@example.com).
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