Q1 global switching and routing equipment market size is $9.1 billion: the lowest point in seven years

According to the latest data from US market research firm Synergy Research, revenue in the global Ethernet switch and router market fell to a seven-year low in the first quarter of 2020.

As we all know, the fourth quarter is a seasonal peak, and the quarter-on-quarter decline in the first quarter is normal, but the quarter-on-quarter decline in the first quarter of this year reached 23%, and the year-on-year decline was 14%, with revenue of US$9.1 billion, the lowest level in the first quarter since 2013. The Ethernet switch, enterprise router and service provider router markets all experienced double-digit year-on-year declines.

Among the many market players, Cisco had a 51% share of the switch and router market in the first quarter, which means that Cisco's market share has exceeded 50% in eight of the past twelve quarters. In the three major market segments, Cisco's share is 57% in Ethernet switches, 65% in enterprise routers, and 35% in service provider routers. The vendors behind Cisco in the three market segments vary, but in general, Cisco is followed by Huawei, Nokia, Juniper, Arista, and HPE. Other active vendors outside the first tier include Ericsson, Extreme, H3C, and ZTE.

Among the three market segments, the Ethernet switch market is the largest, accounting for 62% of the total market in the first quarter. Although GbE switches are still the largest market segment in fixed and modular Ethernet switches, the deployment of 100GbE and 25GbE fixed switches is very fast and has achieved growth in the first quarter; for enterprise routers, revenue in the first quarter fell 15% year-on-year; service provider routers saw the largest decline in the first quarter, down 19% year-on-year.

In terms of regional markets, North America remains the largest regional market, accounting for nearly 40% of global revenue, followed by Asia Pacific, EMEA (Europe, Middle East and Africa) and Latin America. Overall, in all switch and router market segments, the year-on-year revenue declines in major regions were roughly the same.

John Dinsdale, chief analyst at Synergy, said that the Ethernet switch and router market has always been a relatively stable and predictable market, and the unusually sharp changes in the first quarter were obviously affected by COVID-19. Before the epidemic, Synergy's expected revenue for the switch and router market was $1 billion higher than the current reality. However, analysts said that the weakness in the first quarter was more caused by supply chain problems than weak demand. Supply chain problems can generally be solved quickly, but demand is completely different. On the service provider side, demand remains strong as network traffic continues to grow. But demand in the enterprise sector is relatively complex and chaotic, and it will take months for some industries to return to normal.