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IDC's Worldwide Quarterly Ethernet Switch Tracker Shows Solid Growth in Q2 2018 While Router Market Sees Mixed ResultsThe worldwide Ethernet switch market (Layer 2/3) recorded $6.7 billion in revenue in the second quarter of 2018 (2Q18), an increase of 4.8% year over year. Meanwhile, the worldwide total enterprise and service provider (SP) router market recorded $3.8 billion in revenue in 2Q18, decreasing 2.5% on a year-over-year basis. These growth rates are according to results published in the International Data Corporation (IDC) Quarterly Ethernet Switch Tracker and IDC Quarterly Router Tracker. Ethernet Switch Market Highlights 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% year over year in 2Q18. The China market, which makes up the largest share of the region's total, drove the growth with a 26.4% revenue increase between 2Q17 and 2Q18. Hong Kong saw the largest growth in the region, up 45.6% compared to a year earlier, while Taiwan was up 19.2%. The Middle East and Africa (MEA) region also saw solid growth in Ethernet switch sales with regional revenue up 7.0% year over year, driven by the region's largest market, Saudi Arabia, which grew 11.0% from a year earlier. Qatar had the standout performance in the region with 26.0% year-over-year growth. Central and Eastern Europe grew 5.4% year over year with the region's largest market, Russia, increasing 10.4% while Hungary grew 14.8% year over year. The Western Europe region grew 4.3% from 2Q17 with Germany - the region's largest market - increasing 13.2% year over year. Japan grew 3.8% while the United States, the largest regional market in the world, was down 1.6% year over year. "Dynamics in the Ethernet switching market continue to shift as enterprise and service providers are demanding higher-speed Ethernet switch products," said Rohit Mehra, vice president, Network Infrastructure at IDC (News - Alert). "While different regions are at varying stages of maturity, the market is clearly looking to capitalize on new equipment, which is helping to drive vendor revenue growth." 100Gb Ethernet switch revenue continues to grow rapidly as adoption by hyperscale cloud providers and large enterprises accelerates. 100Gb shipments reached more than 2.8 million ports and $893.5 million in revenue in 2Q18. 100Gb now accounts for 13.2% of total market revenue, compared to 8.1% during the same quarter in 2017. 25GbE switch products continue to gain traction with shipments exceeding 2.0 million ports and $197 million in revenue in 2Q18. Port shipments of 40GbE, meanwhile, grew 2.1% year over year, but price erosion for these products led 40 GbE revenues to fall 13.5% compared to last year. The 10Gb market continues to see healthy growth but pricing pressure is also holding back revenue increases. 10Gb shipments in 2Q18 grew 22.8% year over year but revenues dropped 5.2%. Meanwhile, 1Gb remains the primary connectivity technology for enterprise campus and branch deployments, driing 1Gb port shipments to 109.9 million in 2Q18, growing 6.1% year over year with market share remaining steady at 66.6% of all ports shipped. In terms of revenue, 1Gb was up 1.4% year over year. Router Market Highlights The worldwide enterprise and service provider router market fell 2.5% on a year-over-year basis in 2Q18 with the service provider segment, which accounts for 76.9% of the market, declining 3.9% and the enterprise portion growing 2.5% year over year. 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 varied regional performance in 2Q18, with APeJ buoying the market, up 8.6% year over year. MEA increased 6.1% compared to a year earlier. The U.S., which is the largest worldwide market, had a rough quarter with year-over-year revenues down 16.5% in 2Q18. Central and Eastern Europe grew 1.7% while Western Europe was off 0.8% year over year. Vendor Highlights Cisco (News - Alert) finished 2Q18 with a 3.9% year-over-year decline in Ethernet switch revenues and market share of 50.1%. In the hotly contested and fast growing combined 25Gb/50Gb/100Gb segment, Cisco is the market leader with 34.6% revenue share, which is down from the 41.2% share it held in 2Q17. Cisco saw its combined service provider and enterprise router revenue decrease 15.2% year over year in 2Q18, while its market share came in at 35.7% in 2Q18, down from 41.0% in 2Q17. Enterprise router sales were off 7.9% while service provider sales fell 18.9% year over year. Huawei (News - Alert) continued to perform well in both the Ethernet switch and the router markets on an annualized basis. Huawei's Ethernet switch revenue grew 24.1% year over year in 2Q18 for a market share of 10.0%, up from 8.5% in 2Q17. Huawei's enterprise and service provider router revenue increased 23.3% year over year to finish with 31.7% share compared to 25.1% of the total router market in 2Q17. Arista Networks performed well in 2Q18 with its Ethernet switching revenue rising 25.7% year over year, earning a market share of 6.6%, up from 5.5% in 2Q17. 100Gb accounts for close to 60% of Arista's revenue as hyperscale and other public cloud providers account for a large part of Arista's business. Hewlett Packard Enterprise's (HPE) Ethernet switch revenue grew 21.8% from 2Q17 to 2Q18 and its market share rose to 6.5% from 5.6% during that time. Juniper's Ethernet switch revenue fell 7.7% year over year in 2Q18, bringing its market share to 3.8% compared to 4.3% in 2Q17. Juniper also saw a 14.3% decrease in combined service provider and enterprise router revenues with market share falling to 12.8% compared to 14.6% in 2Q17. "While the Ethernet switch market performed well across most segments and regions in 2Q18, the hyperscale cloud providers continue to increase their impact on the overall market," said Petr Jirovsky, research manager, IDC Networking Trackers. "The dynamic Ethernet switching market is challenging for vendors but also offers them new opportunities to grow their business by helping customers navigate the new multicloud world and seamlessly deploy infrastructure across public cloud, on-premises datacenters, and campus environments." The IDC Quarterly Ethernet Switch Tracker and the IDC Quarterly Router Tracker provide total market size and vendor shares for the Ethernet switch and router technologies in an easy-to-use Excel pivot table format. The geographic coverage for both the Ethernet switch market and the router market includes eight major regions (USA, Canada, Latin America, Asia/Pacific (excluding Japan), Japan, Western Europe, Central and Eastern Europe, and Middle East and Africa) and 60 countries. The Ethernet switch market is further segmented by speed (100Mb, 1000Mb, 10Gb, 25Gb, 40Gb, 50Gb, 100Gb), product (fixed managed, fixed unmanaged, modular), and layer (L2, L3, ADC (News - Alert)). Measurement for the Ethernet switch market is provided in vendor revenue, value, and port shipments. The router market is further split by product (high-end, mid-range, low-end, SOHO), deployment (service provider, enterprise), connectivity (core, edge), and the measurements are in vendor revenue, value, and unit shipments. For more information about IDC's Quarterly Ethernet Switch and Router Trackers, please contact Kathy Nagamine ([email protected]).
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