09 Mar 2017
Worldwide Ethernet Switch Market Increased 3.5% Year-over-Year in Fourth Quarter of 2016; Router Market Up 1.5%
FRAMINGHAM, Mass., March 9, 2017 – The worldwide Ethernet switch market (Layer 2/3) recorded $6.7 billion in revenue in the fourth quarter of 2016 (4Q16), an increase of 3.5% year over year. For the full year 2016, the market recorded $24.4 billion in revenue, for a full year growth rate of 2.4%. Meanwhile, the worldwide total enterprise and service provider (SP) router market recorded $3.87 billion in revenue in 4Q16, increasing 1.5% on a year-over-year basis. For the full year 2016, this market finished at $14.58 billion, an increase of 1.3% over 2015. 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 4Q16 Ethernet switch market once again recorded its strongest growth in the Middle East and Africa (MEA) region, which increased a solid 20.6% year over year. For the full year 2016, MEA increased 4.7%. On a country level, the United Arab Emirates was a standout performer in 4Q16, growing 34.2% on an annualized basis. Japan saw consecutive quarters of year-over-year growth, increasing 10.2% on an annualized basis. For the full year, Japan grew 3.1%. Asia/Pacific (excluding Japan)(APeJ) increased 8.2% year over year in 4Q16, while growing 8.5% for the full year. India (up 23.9% year over year) was the growth pacesetter in 4Q16. Western Europe also saw strong growth, increasing 7.0% year over year in 4Q16, with full-year growth more tepid in 4Q16 at 0.8%. Many countries in Western Europe experienced significant year-over-year growth in 4Q16, led by Belgium at 33.5%. Central and Eastern Europe (CEE) returned to growth in 4Q16, increasing 3.8% on an annualized basis, although decreasing 2.8% for the full year. Romania was the CEE's country leader in 4Q16, increasing 21.3% on an annualized basis.
The Americas regions contracted in 4Q16. North America decreased 2.6% year over year in 4Q16, with Canada experiencing a 5.7% annualized decline for the second consecutive quarter. For the full year, North America increased 0.4% over 2015. Latin America declined by 4.4% on a year-over-basis, and was essentially flat for the full year, recording a growth rate of 0.1%. Peru was a country-level standout in 4Q16, recording year-over-year growth of 54.2%.
"As the Ethernet switching market reaches a greater level of maturity from 1GbE to 10GbE, it is increasingly characterized by customers moving more quickly to higher speeds at lower port costs, especially in the datacenter," said Rohit Mehra, vice president, Network Infrastructure at IDC. "While overall port shipments continue to grow, it is the revenues from the fastest speeds that continue to buoy the market."
10Gb Ethernet switch (Layer 2/3) revenue increased 3.4% year over year in 4Q16, coming in at $2.42 billion, while 10Gb Ethernet switch port shipments grew 18.9% year over year with over 11.7 million ports shipped in 4Q16. For the full year 2016, 10Gb Ethernet revenues increased 1.5% over 2015, with port shipments increasing 19.4%. 40Gb Ethernet revenue came in at $696.6 million in 4Q16, the same as in 4Q15, while port shipments fell just below 1.4 million, representing a decrease of 1.0% year over year. For the full year 2016, 40Gb Ethernet revenues grew 19.6% over 2015, with shipments increasing by 59.0%. 10Gb and 40Gb Ethernet are now joined by emerging 100Gb Ethernet (revenue up 377.5% and shipments up 613.7% on annualized basis in 4Q16) to be the primary drivers of the overall Ethernet switch market. 1Gb Ethernet switch revenue decreased 2.2% year over year in 4Q16, despite a 18.4% increase in port shipments in the same period, pointing to a maturing campus segment. For the full year 2016, 1Gb Ethernet revenues fell 4.0% compared to 2015, whereas port shipments grew 13.4%.
The worldwide enterprise and service provider router market grew 1.5% on a year-over-year basis in 4Q16 based on a 2.0% increase in the larger service provider segment and a 0.3% decrease in enterprise routing. For the full year, the combined market increased 1.3%, upon a 0.9% increase in the SP segment and 2.4% growth in the enterprise segment. This will be a market to watch closely over the coming quarters as software-defined architectures start to take hold across the WAN, with the potential for SD-WAN to disrupt traditional routing architectures and WAN transport services markets.
The combined enterprise and service provider router market saw a varied regional performance in 4Q16, with Asia/Pacific once again carrying the market forward. Japan was the best performing region on a year-over-year basis, increasing 19.4% and followed by APeJ with 11.4% growth. MEA increased 5.2%, while North America recorded a 3.4% growth rate. Other regions experienced year-over-year declines in 4Q16, with both European regions contracting (CEE down 3.7% and Western Europe down 6.0%). Latin America experienced the sharpest decline, contracting 31.5% in 4Q16, leading to a 20.7% decline for the full 2016.
Cisco finished 4Q16 with a year-over-year decline of 2.8% in the Ethernet switching market and market share of 55.6%, down from its 57.0% share in 3Q16 and down from 59.1% in 4Q15. For the full year 2016, Cisco declined 3.7% over 2015, while recording 57.0% market share (compared to 60.6% in 2015). In the hotly contested 10GbE segment, Cisco held 53.0% of the market in 4Q16, finishing essentially flat over the previous quarter. Cisco saw its combined service provider and enterprise router revenue decrease 4.8% on an annualized basis, while its market share came in at 42.2% in 4Q16, down from 45.0% in 4Q15. For the full year, Cisco's combined router revenues finished at $6.54 billion, a decrease of 5.1% over 2015.
Huawei continued to perform well in both the Ethernet switch and the router markets. Huawei's Ethernet switch revenue grew 67.8% year over year in 4Q16, for a market share of 9.9%. For the full year 2016, Huawei's Ethernet switch revenues grew 61.8%, leading to a market share of 7.0%, compared to 4.4% in 2015. Huawei's enterprise and SP router revenue increased 16.2% over the same period, to finish with 18.8% of the total router market in 4Q16 compared to 16.5% in 4Q15. For the full year, Huawei's combined router revenues grew 21.2%, with market share of 17.7%.
Hewlett Packard Enterprise's (HPE) Ethernet switch revenue fell 2.2% quarter over quarter in 4Q16 and its market share stands at 5.0% in 4Q16, down from its 5.5% share in 3Q16. (Note: HPE and H3C are tracked separately as of 2Q16).
Arista Networks performed well in 4Q16, with its Ethernet switching revenue rising 33.0% year over year and earning a market share of 4.3%. For the full year 2016, Arista grew 33.1% and recorded market share of 4.1%.
Juniper Ethernet switching increased 2.9% year over year in 4Q16, while decreasing 2.8% for the full year. Juniper also saw a 6.5% year-over-year increase in combined service provider and enterprise router revenues, with market share of 16.9%. For the full year 2016, Juniper's router revenues increased 3.5%, for a market share of 16.1%.
"Digital and network transformation initiative s and emerging 'software-defined' architectures are leading to myriad new opportunities for networking vendors, service providers, systems integrators, and enterprises," said Petr Jirovsky, research manager, Worldwide Networking Trackers. "This is playing out in different ways across sub-markets depending on how prepared vendors and geographies are to adapt."
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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, 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.
For more information about IDC's Worldwide Quarterly Ethernet Switch and Router Trackers, please contact Kathy Nagamine (email@example.com).
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