09 Dec 2020

IDC's Ethernet Switch and Router Trackers Show Mixed Results Across Both Markets in Q3 2020

Ethernet Switch Market Increased 1.9% Year Over Year; Router Market Declined 2.0% in 3Q20

FRAMINGHAM, Mass., December 9, 2020 – The worldwide Ethernet switch market recorded $7.45 billion in revenue in the third quarter of 2020 (3Q20), an increase of 1.9% year over year. Meanwhile, worldwide total enterprise and service provider (SP) router market revenues declined 2.0% year over year in 3Q20 to $3.67 billion. The results were published today in the International Data Corporation (IDC) Quarterly Ethernet Switch Tracker and IDC Quarterly Router Tracker.

The COVID-19 pandemic continued its impact on the global economy in the third quarter of 2020, causing mixed results across various market segments and geographies. As organizations adjust to new business environments, they are making targeted technology investments. For example, a key growth area in the Ethernet switch market continues to be hyperscalers, cloud providers, and communication service providers, which are investing in new technology platforms to support increased demand.

Ethernet Switch Market Highlights

Results were mixed in the Ethernet switch market across various geographic regions. In Asia, for example, the market in China rose 14.7% annually, while Japan's market grew 22.0%. In the broader Asia/Pacific region (excluding Japan and China) (APeJC), the market fell 0.4%. Within APeJC, Australia was down 6.3% on an annualized basis, while Singapore's Ethernet switch market rose 12.5%.

Across Europe and the Middle East there were similarly mixed results. The Ethernet switch market in Central and Eastern Europe (CEE) grew 11.4% with strength in Russia where the market grew 24.2% year over year and in the Czech Republic where the market rose 35.9%. Western Europe's market declined by 3.9% with softness in the United Kingdom (down 15.5% year over year) and France (declining 13.2% compared to 3Q19). The Middle East and Africa (MEA) region grew 9.7% with the United Arab Emirates market growing 19.0% and Qatar's market rising 12.7% compared to a year earlier. There was weakness in the Americas, where the U.S. Ethernet switch market declined 2.0% and Canada's market fell 2.7% annually. The Latin American market fell 18.4%, with Mexico losing 17.8% and Brazil off 13.2% compared to a year earlier.

"The COVID-19 global pandemic continues to impact economies around the globe, and purchases of information technology, including network infrastructure, are not immune. Ethernet switches have definitely been affected by the crisis, but certain segments of the market have proven highly resilient," said Brad Casemore, research vice president, Datacenter and Multicloud Networks at IDC. "Despite mixed overall results in the third quarter of 2020, growth in high-bandwidth datacenter networks continues at the hyperscalers, which are adding capacity to meet the increasing demand for their services. These trends will continue to drive the Ethernet switch market in the dynamic global environment for technology investments."

Growth in the Ethernet switch market continues to be driven by the highest speed switching platforms. For example, port shipments for 100Gb switches rose 34.9% year over year to 7.5 million. 100Gb revenues grew 20.6% year over year in 3Q20 to $1.73 billion, making up 23.2% of the market's revenue. 25Gb switches also saw impressive growth, with revenues increasing 58.6% to $746.7 million and port shipments growing 51.2% year over year. Lower-speed non-datacenter 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. 10Gb port shipments rose 26.0% year over year, but revenue was flat at 0.9% growth. 10Gb switches make up 26.0% of the market's total revenue. 1Gb switches grew 1.3% year over year in port shipments and fell 10.0% in revenue. 1Gb now accounts for 34.6% of the total Ethernet switch market's revenue.

A new market segment in the Quarterly Ethernet Switch Tracker is the place in the network, which shows the split between datacenter and non-datacenter deployments. The non-datacenter portion makes up 56.8% of the total Ethernet switch market's revenues and 87.0% of port shipments. The datacenter portion of the market makes up 43.2% of the market revenues but only 13.0% of port shipments, showcasing the premium price for higher-speed Ethernet switching equipment.

Router Market Highlights

The worldwide enterprise and service provider router market declined 2.0% on a year-over-year basis in 3Q20, with the major service provider segment, which accounts for 77.2% of revenues, growing 0.3% and the enterprise segment of the market declining 8.9%. From a regional perspective, the combined service provider and enterprise router market grew 7.8% year over year in Central and Eastern Europe and 3.7% in Western Europe. In the MEA region, the market rose 7.8%. The APeJC market fell 17.4%, while the market in China dropped 1.5%. In Japan, the market rose 7.8% year over year. In the Americas, the United States market fell 0.2% while Canada's market was down 4.0% annually. The Latin America market declined 20.6%.

Vendor Highlights

Cisco finished 3Q20 with a decline of 0.8% year over year in overall Ethernet switch revenues and market share of 49.9%. In the hotly contested 25Gb/100Gb segment, Cisco is the market leader with 41.7% of the market's revenue. Cisco's combined service provider and enterprise router revenue declined 8.1%, with enterprise router revenue decreasing 16.6% and SP revenues declining 2.4% year over year. Cisco's combined SP and enterprise router market share stands at 35.5%.

Huawei's Ethernet switch revenue rose 18.6% on an annualized basis, giving the company market share of 10.4%. The company's combined SP and enterprise router revenue declined 1.5% year over year, giving the company a market share of 28.3%.

Arista Networks saw Ethernet switch revenues decline 13.5% in 3Q20, bringing its share to 6.4% of the total market. 100Gb revenues account for 71.7% of the company's total revenue, reflecting the company's longstanding presence at hyperscalers and other cloud providers.

HPE's Ethernet switch revenue declined 2.3% year over year, giving the company a market share of 5.1%.

Juniper's Ethernet switch revenue fell 10.3% year over year in 3Q20, bringing its market share to 2.7%. Juniper saw a 5.9% increase in combined enterprise and SP router sales, bringing its market share in the router market to 11.8%.

"The third quarter of 2020 saw varied trends depending on the segment of the market and geographic region in both the Ethernet switch and router markers," said Petr Jirovsky, research director, IDC Networking Trackers. "In Ethernet switching, there were pockets of growth across parts of Europe and Asia, while in routing, Europe showed more strength compared to Asia. These trends continue to showcase the uneven dynamics in the global markets as technology buyers continue to adjust to the economic climate resulting from the COVID-19 pandemic."

The IDC Quarterly Ethernet Switch Tracker and the IDC 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 nine major regions (USA, Canada, Latin America, People's Republic of China, Asia/Pacific (excluding Japan & China), 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/50Gb, 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.

About IDC Trackers

IDC Tracker products provide accurate and timely market size, vendor share, and forecasts for hundreds of technology markets from more than 100 countries around the globe. Using proprietary tools and research processes, IDC's Trackers are updated on a semiannual, quarterly, and monthly basis. Tracker results are delivered to clients in user-friendly Excel deliverables and online query tools.

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International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly-owned subsidiary of International Data Group (IDG), the world's leading tech media, data and marketing services company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn. Subscribe to the IDC Blog for industry news and insights: http://bit.ly/IDCBlog_Subscribe.

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