Ethernet switch market shows solid growth, while router market sees mixed results

The worldwide Ethernet switch market (Layer 2/3) recorded USD 6.7 billion in revenue in the second quarter of 2018 (2Q18), an increase of 4.8 percent year-over-year (Y-o-Y). Meanwhile, the worldwide total enterprise and service provider (SP) router market recorded USD 3.8 billion in revenue in 2Q18, decreasing 2.5 percent on a Y-o-Y basis, elucidates IDC.

From a geographic perspective, the 2Q18 Ethernet switch market recorded its strongest growth in the Asia/Pacific (excluding Japan) region (APeJ), which increased 16.6 percent Y-o-Y in 2Q18. The China market, which makes up the largest share of the region’s total, drove the growth with a 26.4 percent revenue increase between 2Q17 and 2Q18. Hong Kong saw the largest growth in the region, up 45.6 percent compared to a year earlier, while Taiwan was up 19.2 percent.

The Middle East and Africa (MEA) region also saw solid growth in Ethernet switch sales with regional revenue up 7 percent Y-o-Y, driven by the region’s largest market, Saudi Arabia, which grew 11 percent from a year earlier. Qatar had the standout performance in the region with 26 percent Y-o-Y growth. Central and Eastern Europe grew 5.4 percent Y-o-Y with the region’s largest market, Russia, increasing 10.4 percent while Hungary grew 14.8 percent Y-o-Y. The Western Europe region grew 4.3 percent from 2Q17 with Germany – the region’s largest market – increasing 13.2 percent Y-o-Y. Japan grew 3.8 percent while the United States, the largest regional market in the world, was down 1.6 percent Y-o-Y.

The worldwide enterprise and service provider router market fell 2.5 percent on a Y-o-Y basis in 2Q18 with the service provider segment, which accounts for 76.9 percent of the market, declining 3.9 percent and the enterprise portion growing 2.5 percent Y-o-Y. The service provider segment was negatively impacted by weak CapEx spending by major communications service providers, especially in the United States.

The combined enterprise and service provider router market saw a varied regional performance in 2Q18, with APeJ buoying the market, up 8.6 percent Y-o-Y. MEA increased 6.1 percent compared to a year earlier. The US, which is the largest worldwide market, had a rough quarter with Y-o-Y revenues down 16.5 percent in 2Q18. Central and Eastern Europe grew 1.7 percent while Western Europe was off 0.8 percent Y-o-Y.

Vendor highlights. Cisco finished 2Q18 with a 3.9 percent Y-o-Y decline in Ethernet switch revenues and market share of 50.1 percent. In the hotly contested and fast growing combined 25Gb/50Gb/100Gb segment, Cisco is the market leader with 34.6 percent revenue share, which is down from the 41.2 percent share it held in 2Q17. Cisco saw its combined service provider and enterprise router revenue decrease 15.2 percent Y-o-Y in 2Q18, while its market share came in at 35.7 percent in 2Q18, down from 41 percent in 2Q17. Enterprise router sales were off 7.9 percent while service provider sales fell 18.9 percent Y-o-Y.

Huawei continued to perform well in both the Ethernet switch and the router markets on an annualized basis. Its Ethernet switch revenue grew 24.1 percent Y-o-Y in 2Q18 for a market share of 10.0 percent, up from 8.5 percent in 2Q17. Huawei’s enterprise and service provider router revenue increased 23.3 percent Y-o-Y to finish with a 31.7 percent share compared to 25.1 percent of the total router market in 2Q17.

Arista Networks performed well in 2Q18 with its Ethernet switching revenue rising 25.7 percent Y-o-Y, earning a market share of 6.6 percent, up from 5.5 percent in 2Q17. 100Gb accounts for close to 60 percent of Arista’s revenue as hyperscale and other public cloud providers account for a large part of Arista’s business.

HPE’s Ethernet switch revenue grew 21.8 percent from 2Q17 to 2Q18 and its market share rose to 6.5 percent from 5.6 percent during that time.

Juniper’s Ethernet switch revenue fell 7.7 percent Y-o-Y in 2Q18, bringing its market share to 3.8 percent compared to 4.3 percent in 2Q17. Juniper also saw a 14.3 percent decrease in combined service provider and enterprise router revenues with market share falling to 12.8 percent compared to 14.6 percent in 2Q17.