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Ethernet switches, routers show growth

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The worldwide Ethernet switch market (Layer 2/3) recorded $6,43-billion in revenue in the second quarter of 2017 (2Q17), an increase of 7,8% year over year, according to IDC.
Meanwhile, the worldwide total enterprise and service provider (SP) router market recorded $3,92-billion in revenue in 2Q17, increasing 6,7% on a year-over-year basis, says IDC’s Worldwide Quarterly Ethernet Switch Tracker and Worldwide Quarterly Router Tracker.
From a geographic perspective, the 2Q17 Ethernet switch market recorded its strongest growth in the Middle East and Africa (MEA) region and in Asia/Pacific (excluding Japan)(APeJ), where both increased a solid 16,8% year over year in 2Q17. At the country level, Israel (up 85,2% year over year) and Vietnam (up 38,8% year over year) were among the standouts in their respective regions. Both European regions (Western Europe and Central and Eastern Europe (CEE)) saw strong growth, with each increasing 5,5% year over year in 2Q17, with Greece (up 142,6% year over year) and Hungary (up 48,1% year over year) being the growth pacesetters.
North America grew 4,9% year over year in 2Q17, with the US growing 5%. Japan experienced a flat-to-positive performance in 2Q17, with a 0,1% year-over-year increase. Latin America was the sole region to experience a decline, contracting 3,3% on an annualised basis. Within Latin America, Argentina was once again a bright spot, growing 49,1% over 2Q16.
“Application explosion associated with digital transformation and continued proliferation of cloud buildouts underpinned a strong market performance in 2Q17,” says Rohit Mehra, vice-president, Network Infrastructure at IDC. “These transformational trends drive port shipments up, however the promise of emerging higher port speeds continually shifts the dynamics of Ethernet switching investments. Solid growth should continue throughout 2017, even as Ethernet switching and routing purchase behaviour trends may take some turns.”
10Gb Ethernet switch (Layer 2/3) revenue increased 4,2% year over year in 2Q17, coming in at $2,24-billion, while 10Gb Ethernet switch port shipments grew 53,1% year over year with over 13,8-million ports shipped in 2Q17. 40Gb Ethernet revenue came in at $681,5-million in 2Q17, declining 9,1% over 2Q16, while port shipments fell just below 1,4-million, representing a decrease of 27,7% year over year. The 40Gb port shipments and revenue declines were primarily due to the rapid adoption of native 25Gb for top-of-rack Ethernet switch products by the larger public cloud and hyperscale providers. 25Gb port shipments reached over 557k ports and $71,4-million in revenue in 2Q17. 100Gb Ethernet also strongly benefited from this trend with revenue growing 284% and shipments increasing 639% on an annualised basis in 2Q17. 1Gb Ethernet switch revenue increased 0,9% year over year in 2Q17, alongside a 13,6% increase in port shipments in the same period, pointing to a maturing campus segment.
The worldwide enterprise and service provider router market grew 6,7% on a year-over-year basis in 2Q17 based on an 11,2% increase in the larger service provider segment and a 7,1% decrease in enterprise routing. 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 especially at the network edge.
The combined enterprise and service provider router market saw a varied regional performance in 2Q17, with APeJ recording the strongest growth (up 30,7% year-over-year). MEA and CEE also performed well, growing 22% and 21,2% over 2Q16, respectively. Every remaining region experienced declines in 2Q17. Western Europe contracted 1% on an annualised basis, while North America decreased 6,4%. Latin America was down 8,4% over 2Q16, while Japan recorded the weakest performance, declining 12% year-over-year.