According to a recent report by Dell’Oro Group, the trusted source for information about the telecommunications, security, networks, and data center industries, worldwide Campus Switch sales were up 23 percent year-over-year (Y/Y) in 3Q 2022, the highest growth rate in nearly two decades, surpassing even the rate of recovery after the two prior market downturns in 2008 and 2020. Growth was broad-based across most vendors, including large and small players, but Cisco was the only vendor with meaningful share gain, increasing by nearly five points during the quarter.
“Gradually improving supply situation is helping release aging backlog, which sent port shipments to record levels for the quarter and for the first nine months of the year,” said Sameh Boujelbene, Vice President at Dell’Oro Group. “ Unfortunately, most of the backlog fulfilled during the quarter is from orders placed ahead of the list price increase. Consequently, vendors’ margins continue to be suppressed as cost continues to rise without being passed on to customers. As a point of reference, the cost of some constrained components went up by factors of 100 to 500.
“With such a strong performance for the first nine months of the year, the market is on track to achieve strong double-digit growth in 2022. Although 2022 is coming above expectations, we have not changed our forecast for 2023 and still predict a low-single-digit growth in the market. This growth will be fueled by near-record backlog levels reported by most manufacturers. Nevertheless, as the 2023 year progresses and backlog starts to normalize, macro-economic headwinds may start to suppress market performance,” added Boujelbene.
Additional highlights from the 3Q 2022 Ethernet Switch – Campus Report:
- As supply remains tight, market share shifts are and will remain subject to wild quarterly variations that may not be necessarily reflective of competitive displacements, but rather the timing of shipments.
- Huawei retained the leading revenue position in China, for the second consecutive quarter after being displaced by H3C in 1Q 2022.
- 2.5/5.0 Gbps ports were up more than 40 percent Y/Y, marking the second consecutive quarter of strong double-digit growth. What was interesting this quarter was that growth was diversified across various vendors, unlike prior quarters when Cisco used to drive more than two-thirds of the shipments in this segment.