The Worldwide Ethernet switch market recorded $6,16-billion in revenue in the first quarter of 2020 (1Q20), a decrease of 8,9% year over year.
Meanwhile, the worldwide total enterprise and service provider (SP) router market revenues fell 16.4% year over year in 1Q20 to $2.99 billion. These market results were published today in the International Data Corporation (IDC) Quarterly Ethernet Switch Tracker and IDC Quarterly Router Tracker.
A variety of factors led to the weakening of these markets across the globe. Despite the Ethernet switch market growing 2,3% for the full year 2019, in the fourth quarter of 2019 the market fell 2,2%, indicating that the market’s slow end to 2019 spilled into 1Q20.
The first quarter of 2020 was also impacted by the Covid-19 pandemic that swept across the world throughout the quarter, specifically disrupting supply chains while weakening customer demand. IDC expects the negative impact of Covid-19 on both the Ethernet switch and router markets to continue in the second quarter of 2020.
From a geographic perspective, the 1Q20 Ethernet switch market saw mixed results across the globe. The Middle East and Africa (MEA) region declined 2,9%, with Saudi Arabia’s market off 12,7% year over year.
Across Europe, growth was uneven. The Central and Eastern Europe (CEE) region grew 3,7% compared to a year earlier, with Russia up 23,2% year over year.
The Western Europe market fell 12,9% with Germany losing 10,6% year over year and the UK off 18,4% from a year earlier.
The Asia/Pacific region (excluding Japan and China) (APeJC) declined 7% year over year, with India off 11,3% and Australia declining 16,2% year over year. The People’s Republic of China was down 14,6% year over year while Japan was relatively flat with a 0,1% increase compared to the first quarter of 2019. The Latin American market dropped 9,7% year over year, while the market in the US declined 8,7% annually and Canada fell 7,2% year over year.
“Weakness in the Ethernet switch and routing markets at the end of 2019 continued into the first quarter of 2020, which was exacerbated by the onset of the novel coronavirus and subsequent lockdown of economies around the globe as 1Q20 progressed,” says Brad Casemore, research vice-president: Datacenter and Multicloud Networks at IDC.
“Meanwhile, diverging trends intensify in the Ethernet switch market as hyperscale and cloud providers invest in greater datacenter scale and higher bandwidths while enterprises continue to refresh campus networks with lower-speed switch ports.”
Growth in the Ethernet switch market continues to be driven by the highest speed switching platforms. For example, port shipments for 100Gb switches rose 52,1% year over year to $5,5-million. 100Gb revenues grew 9,9% year over year in 1Q20 to $1,28-billion, making up 20,8% of the market’s revenue. 25Gb switches also saw impressive growth, with revenues increasing 58,9% to $482,9-million and port shipments growing 67,7% year over year.
Lower-speed campus 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 3,9% year over year, but revenue declined 21,4%. 10Gb switches make up 24,8% of the market’s total revenue. 1Gb switches declined 3,8% year over year in port shipments and fell 11,9% in revenue.1Gb now accounts for 39% of the total Ethernet switch market’s revenue.
The worldwide enterprise and service provider router market decreased 16,4% on a year-over-year basis in 1Q20, with the major service provider segment, which accounts for 75,1% of revenues, decreasing 16,8% and the enterprise segment of the market declining 15,3%.
From a regional perspective, the combined service provider and enterprise router market fell 29,4% in APeJC. Japan’s total market grew 8,4% year over year and the People’s Republic of China market was off 10,9%.
Revenues in Western Europe declined 23,5% year over year, while the combined enterprise and service provider market in the CEE region declined 17,1%. The MEA region was down 5,2%.
In the US, the enterprise segment was down 12,2%, while service provider revenues fell 19,6%, giving the combined markets a year-over-year drop of 17,5%. The Latin America market declined 15,9% on an annualised basis.
Cisco finished 1Q20 with a 12% year-over-year decline in overall Ethernet switch revenues and market share of 51,9%. In the hotly contested 25Gb/100Gb segment, Cisco is the market leader with 39,8% of the market’s revenue. Cisco’s combined service provider and enterprise router revenue declined 28,1% year over year, with enterprise router revenue decreasing 18,7% and SP revenues falling 33,8%. Cisco’s combined SP and enterprise router market share stands at 36,3%.
Huawei’s Ethernet switch revenue declined 14% on an annualised basis, giving the company a market share of 8,4%. The company’s combined SP and enterprise router revenue declined 2,1% year over year, resulting in a market share of 28,8%.
Arista Networks saw its Ethernet switch revenues decline 18.7% in 1Q20, bringing its share to 6,7% of the total market. 100Gb revenues account for 73,7% of the company’s total revenue, reflecting the company’s longstanding presence at hyperscalers and other cloud providers.
HPE’s Ethernet switch revenue increased 6,7% year over year, giving the company a market share of 6,2%, up from 5,3% market share the same quarter a year earlier.
Juniper’s Ethernet switch revenue rose 14,1% year over year in 1Q20, bringing its market share to 3,3%. Juniper saw a 16% decline in combined enterprise and SP router sales, bringing its market share in the router market to 10,5%.
“Results in the Ethernet switch and routing markets were fairly consistent across geographies, indicating the widespread impact the coronavirus has had on both markets across the globe,” notes Petr Jirovsky, research director of IDC Networking Trackers.
“At the end of 2019, a variety of factors contributed to economic uncertainty, including tensions related to the US-China trade war, Brexit being finalised, and then in the first quarter of 2020, the novel coronavirus.
“While results from some countries have been mixed in 1Q20, the dynamics across these markets will continue to evolve significantly in the near term. IDC will monitor these trends and their impact across all geographies and segments of these markets.”