IDC: Global Ethernet switch and router markets mixed in the second quarter

According to the Ethernet Switch and Router Quarterly Tracking Report released by IDC yesterday, the global Ethernet switch market revenue reached US$6.6 billion in the second quarter of 2020 (20Q2), a year-on-year decrease of 6.3%. At the same time, the total revenue of the global enterprise and service provider (SP) router market increased slightly by 0.1% year-on-year to US$4 billion.

The global response to the COVID-19 pandemic has had a certain impact on the Ethernet switch and router market results. The lockdown policies in many parts of the world have caused many enterprises to suspend their investment plans. At the same time, hyperscale data center operators, cloud providers, and communications service providers have increased their investments in response to growing demand. This has created a dynamic environment with mixed market results, and IDC expects this trend to continue in the second half of 2020.

Petr Jirovsky, research director of IDC's Network Tracker Report, pointed out: "In addition to the different performances of the Ethernet switch and router markets for enterprises, hyperscale data centers, and service providers in the second quarter, there were also great differences in regional markets. The regional markets where the epidemic subsided in the second quarter began to recover, while during this period, parts of Europe and the Americas strengthened their epidemic response measures, which were all unfavorable factors."

Ethernet Switch Market Highlights

From a regional perspective, the Ethernet switch market in most parts of the world has declined year-on-year. One bright spot is the Chinese market, which grew 25.4% year-on-year in the second quarter. The Asia-Pacific region (excluding Japan and China) fell 6.7% year-on-year, with Hong Kong falling 35.8%. The Japanese market fell 3.0% year-on-year.

Europe and the Americas also saw weakness. Western Europe's Ethernet switch market fell 13.1%, with the UK down 23.4% and France down 20.5%. Central and Eastern Europe fell 7.6%, with Hungary down 20.1% and the Czech Republic up 17.6%. The Middle East and Africa region fell 7.5%, with Qatar down 17.1%, but Israel up 7.6%. In the Americas, the U.S. fell 12.5%, while Canada fell 16.5%. Latin America fell 22.1%, with Mexico down 21.6% year over year.

Brad Casemore, IC research vice president, said IDC’s Data Center and Multi-Cloud Networking “weakness in the Ethernet switch market continued from the first quarter into the second quarter, primarily due to the ongoing impact of the COVID-19 pandemic that has led to lockdowns in most economies around the world. Despite the headwinds from COVID-19, the Ethernet switch market has remained relatively healthy, primarily due to relatively stable demand from hyperscale data centers and other cloud providers, who continue to invest in expanding data center size and bandwidth.”

High-speed switching platforms continue to drive growth in the Ethernet switch market. For example, 100Gb switch port shipments increased 51.2% year-over-year to 6.7 million units in the second quarter, and revenue increased 16.3% year-over-year to nearly $1.5 billion, accounting for 22.4% of the total market revenue. 25Gb switch revenue increased 39.0% to $505.9 million, and port shipments increased 62.2%, an astonishing increase. Low-speed campus switches, as a more mature part of the market, continued to decline in average selling prices (ASPs), resulting in mixed performance in port shipments and revenue. 10Gb switch port shipments increased 23.1% year-over-year, but revenue declined 6.1%, accounting for 28.0% of the total market revenue. 1Gb switch port shipments declined 10.1% year-over-year, and revenue declined 17.9%, accounting for 35.0% of the total market revenue.

Router Market Highlights

In the second quarter of 2020, the global enterprise and service provider router market grew 0.1% year-over-year, with the main service provider segment growing 1.5% and accounting for 76.9% of revenue, and the enterprise segment declining 4.2%. Regionally, the service provider and enterprise router market in China grew 18.1% year-over-year, and Japan grew 20.2%. Asia Pacific (excluding Japan and China) declined 5.6% year-over-year. Revenues in Western Europe fell 10.4%, and Central and Eastern Europe fell 8.7%. The Middle East and Africa fell 5.7%. In the United States, the enterprise segment fell 12.0%, and the service provider segment fell 5.9%, bringing the total market down 7.5% year-over-year. The Latin American market fell 2.6%.

Manufacturer Highlights

In the second quarter, Cisco's Ethernet switch revenue fell 13.4% year-on-year, with a market share of 47.2%. In the highly competitive 25Gb/100Gb market segment, Cisco became the leader with a market revenue share of 35.7%. Cisco's service provider and enterprise router combined revenue fell 9.6%, with enterprise router revenue falling 11.8% and service provider revenue falling 8.1%, with a combined market share of 33.2%.

Huawei's Ethernet switch revenue increased by 15.7% year-on-year, with a market share of 12.0%, and its combined service provider and enterprise router revenue increased by 16.7% year-on-year, with a market share of 36.3%.

Arista Networks' Ethernet switch revenue fell 17.9% year-over-year in the quarter, with a market share of 6.4%. 100Gb revenue accounted for 72.4% of the company's total revenue, reflecting Arista's long-term development among cloud providers and large enterprises.

HPE's Ethernet switch revenue fell 17.3% year over year, with a market share of 5.1%.

Juniper's Ethernet switch revenue fell 8.2%, giving it a 2.8% market share, while total enterprise and service provider router sales fell 3.3%, giving it a 10.2% market share.