The worldwide Ethernet switch market grew revenue 15,8% YoY to $11,7-billion in the third quarter of 2023 (3Q23), says IDC, while the total worldwide enterprise and service provider (SP) router market recorded $3,7-billion in revenue in 3Q23 – a YoY decline of 9,4%.
Ethernet switch market highlights
The Ethernet switch market’s growth of 15,8% in 3Q23 builds on annualised growth of 38,4% in 2Q23. Year to date in 2023, the Ethernet switch market is up 27,7% compared to the first three quarters of 2022.
A major driver of growth in the market continues to be the easing of supply chain issues that began during the global pandemic. With improved component availability, vendors are increasingly able to recognise revenues from fulfilling backlogged product orders.
This trend is particularly relevant in the non-data centre (non-DC) segment of the Ethernet switching market, where revenues grew 22,2% in 3Q23 and are up 36,5% year to date. Revenues in the data centre (DC) portion of the market rose 7,2% YoY in 3Q23. Through the first three quarters of the year, DC market revenues are up 16,8%.
Within the DC segment of the market, hyperscalers and cloud providers continue to drive adoption of ever-higher Ethernet switch speeds. Market revenues for 200/400 GbE switches rose 44% YoY in the DC segment, with port shipments up 63,9% on an annualised basis.
Across both the DC and non-DC segments of the market, 100GbE revenues increased 6% YoY in 3Q23 and 25/50 GbE revenues increased 26,3%. ODM (original device manufacturer) Direct sales continue to be an important part of the data centre segment, rising 7,4% YoY to make up 14,7% of the data centre segment’s revenues.
In the non-DC segment, lower-speed switches that are typically deployed in enterprise campus and branch locations showed strength as vendors drew down their backlog of product orders. In the quarter, revenues for 1GbE switches rose 18,3% YoY and 10GbE switches rose 5,8% in the non-DC segment. 2.5/5GbE switch revenue in the non-DC segment – also known as multi-gigabit Ethernet switches – rose 92% YoY in 3Q23.
From a geographic perspective, the total Ethernet switch market saw growth in most regions of the world. In the US, revenues rose 26,7% YoY in the quarter, while in Canada the market improved 28,6%. In Latin America, the market rose 25,9%. In Western Europe, the market rose 12%, while in Central & Eastern Europe the market rose 17,8%. In the Asia/Pacific region (excluding Japan and China), markets grew 14,1% with the People’s Republic of China market declining 12,4% YoY and Japan’s market growing 2,9%.
“Ethernet switching continues to be a dynamic market driven by mega trends. Firstly, hyperscalers and service providers continue to drive higher-speed and feature-rich platforms to support new data centre workloads such as Generative AI,” says Vijay Bhagavath, IDC research vice-president, cloud and datacentre networks at IDC. “Meanwhile, with normalising supply chains, Ethernet switch vendors are able to draw down record-high product order backlogs. Ethernet switching remains a critically important technology for efficiently and effectively connecting networks across the globe.”
Router market highlights
The service provider segment of the router market, which includes both communications SPs and cloud SPs, declined 9,4% Yoy in 3Q23 and delivered 75,3% of the market’s total revenues. Revenues in the enterprise segment also declined 9,4% in the quarter and account for the remaining share of the market. From a regional perspective, the combined service provider and enterprise router market in the Americas declined 7,3%, while in the Asia/Pacific region, the market fell 11,1% YoY. In the Europe, Middle East & Africa (EMEA) region, the market was off 10,4% YoY.
Vendor highlights
Cisco’s Ethernet switch revenues increased 20,1% YoY in 3Q23 with DC segment revenues up 12,9% and non-DC segment revenues growing 23,2%. Nearly three quarters (72,2%) of the company’s Ethernet switch revenues are in the non-DC segment. The company’s market share stood at 45,1% to end 3Q23. Cisco’s combined service provider and enterprise router revenue declined 3,6% in the quarter, giving the company a market share of 39,3% in 3Q23.
Arista Networks’ Ethernet switch revenues – 91,1% of which are in the DC segment – increased 27,3% YoY in 3Q23, giving the company 10,6% market share.
Huawei’s Ethernet total switch revenue increased 1% in 3Q23, giving the company a market share of 9,6%. The company’s combined SP and enterprise router revenue declined 6,5%, giving the company a market share of 25,7% in the quarter.
HPE’s Ethernet switch revenue – 92% of which is in the non-DC segment – increased 88,4% in 3Q23, resulting in a market share of 7,7%.
H3C’s Ethernet switch revenue declined 11,5% YoY 3Q23, giving the company a market share of 4,1%. In the combined service provider and enterprise routing market, H3C’s revenues decreased 3,7% in 3Q23, resulting in a market share of 2,2%.