Worldwide Ethernet Switch Market Increased 4.4% Year Over Year in Third Quarter of 2014
IDC's Worldwide Quarterly Ethernet Switch and Router Tracker Shows Record Ethernet Switch Market Size, Weaker Router Market
From a geographic perspective, the 3Q14 results found the Ethernet switch market once again saw its highest growth in Asia/Pacific (excluding Japan) (APeJ), which increased 14.6% year over year despite declining -1.5% on a sequential basis. China continues to be an anchor for APeJ growth, increasing 25.0% year over year with Hong Kong growing 30.7% year over year. The Middle East and Africa (MEA) followed closely with a year-over-year growth rate of 12.4%, spurred by noteworthy gains in the larger regional economies, such as Saudi Arabia (30.6%) and the United Arab Emirates (22.1%), as well as an impressive 51.2% in the smaller Qatar. Both North America, on the strength of the US market, and Western Europe grew closer to the rate of the overall market, with 5.2% and 4.8% year-over-year growth, respectively. Japan had a significantly weaker quarter with a year-over-year decline of -17.7% despite a 10.1% sequential increase. Central & Eastern Europe (CEE) underwent a -9.5% year-over-year contraction in 3Q14 as it experiences ongoing political uncertainty in Russia and Ukraine. To this end, Ukraine declined -35.2% while Russia was down -10.9% year over year in 3Q14. Finally, the normally robust growth in Latin America was disrupted as this market declined -3.8% year over year, largely due to a -13.3% year-over-year contraction in Mexico.
"Given increasingly complex network workloads in both the datacenter and the campus, the 10Gb Ethernet switch market continues to grow steadily as average selling prices decline. 40Gb Ethernet is also taking off in the datacenter, which will create a robust growth engine for the overall market for several years to come," said Rohit Mehra, Vice President, Network Infrastructure at IDC. "The 1Gb Ethernet market continues to be relevant, especially in the campus. However, expect 'speeds and feeds' to be complemented by operational simplicity as the dominating theme in this market."
10Gb Ethernet switch (Layer 2/3) revenue increased -7.0% year over year to $2.3 billion while 10Gb Ethernet switch port shipments grew a strong 27.9% in 3Q14 to nearly 6.4 million ports as average selling prices fall. 40Gb Ethernet continues to rapidly grow as a stand-alone segment and now accounts for more than $420 million per quarter in revenue, a year-over-year gain of more than 100%. 10Gb and 40Gb Ethernet continues to be the primary driver of the overall Ethernet switch market.
The worldwide enterprise and service provider router market declined -2.7% year over year in 3Q14. However, performance of key segments within the router market varied widely with the service provider segment increasing a modest 0.7% year over year while the enterprise segment fell -11.7% year over year. The router market also saw varied performance on a regional basis. Asia/Pacific (excluding Japan) and Latin America were the only regions to see year-over-year growth, with increases of 9.1% and 5.2%, respectively. The Middle East & Africa region saw a decline of -0.9% year over year. Western Europe, Japan, and North America each dropped between -5% and -7% year over year while CEE saw a more precipitous decline of -16.6%.
Cisco had a strong quarter in L2/L3 Ethernet switching that led to 6.2% year-over-year growth and market share that grew to 62.9% in 3Q14 from 59.8% in the previous quarter. Cisco's market share was 61.8% in 3Q13. In the hotly contested 10GbE segment, Cisco held 63.7% of the market in 3Q14, up from 61.3% in the previous quarter, but down from the 65.3% held in 3Q13. Cisco's service provider and enterprise router revenue declined -10.9% year over year.
HP's Ethernet Switch revenue increased 5.2% year over year, roughly the rate of the overall market, while declining -1.6% quarter over quarter in 3Q14. HP's market share in switching now stands at 9.3%, down from 10.0% in 2Q14 and is approximately the same as it was in 3Q13.
Falling from recent double-digit year-over-year growth in Ethernet switching, Juniper saw 9.8% year-over-year growth in 3Q14, while falling -18.4% sequentially. Its router revenue declined -11.4% year over year, resulting in an unusually down quarter for routing.
"With use cases and deployment models growing in diversity and complexity, increased capacity needs will continue to drive the Ethernet switch market," said Petr Jirovský, Research Manager in IDC's Networking Trackers Group. "However, there is significant regional and country differentiation in technology adoption and resulting Ethernet switch demand."
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The IDC's Worldwide Quarterly Ethernet Switch and Router Tracker provides 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 58 countries. The Ethernet switch market is further segmented by speed (100Mb, 1000Mb, 10Gb, 40Gb), product (fixed managed, fixed unmanaged, modular), and layer (L2, L3, L4-7). Measurement for the Ethernet switch market is provided in vendor revenue, customer 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, customer value, and unit shipments.
For more information about IDC's Worldwide Quarterly Ethernet Switch and Router Tracker, please contact Kathy Nagamine (firstname.lastname@example.org).
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