Campus Switch sales beat expectations in 2Q 2022

According to a recent report by Dell’Oro Group, the trusted source for information about the telecommunications, networks, and data center industries, worldwide Campus Switch sales were up 5 Percent in 2Q 2022, above our expectations of a low single-digit growth as vendors were able to circumvent some of the supply challenges. On a trailing four-quarter basis, Arista, Juniper, and Ubiquiti gained share outside of China.

“While demand remains strong across the board, the market performance continues to be defined predominantly by the supply environment,” said Sameh Boujelbene, Senior Director at Dell’Oro Group. “When we entered the second quarter, many vendors sent warning signals that the supply situation is expected to further tighten, especially with the multi-week Covid lockdowns in China. Surprisingly, some of the vendors’ efforts to navigate these supply issues started to bear fruits, allowing them to fulfill a higher level of shipments than anticipated. These efforts include multi-sourcing strategies, product re-design to accommodate different components, and use of the brokerage market, among others.

“As supply remains tight, market share shifts may be subject to wild quarterly variations that may not be necessarily reflective of competitive displacements, but rather the timing of shipments. In an attempt to neutralize some of these quarterly variations, we looked at revenue share on a trailing-four quarter basis. In doing so, it appeared there hasn’t been a significant market share movement outside of China, with the exception of Cisco and HPE losing about half a point of revenue share to Arista, Juniper, and Ubiquiti,” added Boujelbene.

Additional highlights from the 2Q 2022 Ethernet Switch – Campus Report:

• Revenue growth surpassed that of shipments, suggesting that average sales prices (ASPs) were up during the quarter, mostly the result of a more favorable product mix. Although supply challenges are causing vendors to raise their list prices, these pricing actions won’t start to significantly impact market results until later in the year due to elongated lead times.
• Huawei regained the leading revenue position in China, after being displaced by H3C in the prior quarter.
• 5/5.0 Gbps ports were up 39 percent Y/Y, following the decline last quarter which was mostly due to supply issues. Despite this robust growth, 2.5/5.0 Gbps comprised only 1 percent of the ports shipped during the quarter.

CT Bureau