[March 02, 2015]

IDC's Worldwide Quarterly Ethernet Switch and Router Tracker Shows Ethernet Switch Market Surpassing $6 Billion and Improved Router Market

The worldwide Ethernet switch market (Layer 2/3) revenues reached a record $6.2 billion in the fourth quarter of 2014 (4Q14), representing an increase of 3.8% year over year and 3.6% over the previous quarter. For the full year 2014, the market expanded by 3.9% over 2013. Meanwhile, the worldwide total router market reversed recent year-over-year declines, growing 2.5% year over year and 5.6% sequentially. However, the router market contracted -0.6% for the full year 2014, according to the preliminary results published in the International Data Corporation (IDC) Worldwide Quarterly Ethernet Switch Tracker and the Worldwide Quarterly Router Tracker.

From a geographic perspective, the 4Q14 results saw a break in recent trends with the Ethernet switch market seeing its highest growth in Latin America, which increased at a strong 13.8% year over year and 24.4% on a sequential basis. The Europe, Middle East, and Africa (EMEA) region also performed well, growing 7.0% year over year and 8.8% sequentially. North America grew more modestly at 2.5% year over year, while contracting -1.8% sequentially. On the other hand, the Asia/Pacific region, including Japan (APJ), was essentially flat year over year (increasing 0.7%), but was more in line with global results sequentially (up 4.1%).

"Despite precipitous price erosion, 10Gb Ethernet is the primary growth driver of the Ethernet switching market, with 40Gb Ethernet growing in stature quickly, as datacenters seek greater capacity to deliver a feverishly proliferating ecosystem of enterprise and cloud applications," said Rohit Mehra, Vice President, Network Infrastructure at IDC (News - Alert). "The 1Gb Ethernet market remains important to the enterprise campus network, although price declines will potentially challenge market growth."

10Gb Ethernet switch (Layer 2/3) revenue increased 5.2% year over year to reach $2.3 billion while 10Gb Ethernet switch port shipments grew a robust 24.4% year over year to reach nearly 6.8 million ports shipped in 4Q14 as average selling prices continue to fall. 40Gb Ethernet continues to rapidly grow as a stand-alone segment and now accounts for more than $520 million in revenue per quarter with year-over-year growth of more than 100%. 10Gb and 40Gb Ethernet continue to be the primary drivers of the overall Ethernet switch market.

The worldwide enterprise and service provider router market increased 2.5% year over year in 4Q14. However, performance of the key segments within the router market varied widely with the service provider segment increasing 54% year over year while the enterprise segment continued to struggle, falling 5.1% year over year. The router market also saw varied performance on a regional basis. Latin America, Asia/Pacific, including Japan (APJ), and EMEA all saw year-over-year growth, with increases of 13.9%, 6.8%, and 6.1%, respectively. The story was very different in North America as the router market declined -5.0% year over year in 4Q14.

Cisco (News - Alert) had a healthy quarter in L2/L3 Ethernet switching with 3.8% year-over-year growth in 4Q14, although its market share declined to 61.1% from 62.9% in the previous quarter. Cisco also stood at 61.1% in the fourth quarter of 2013. In the hotly contested 10GbE segment, Cisco held 59.3% of the market in 3Q14, down from 63.7% in the previous quarter, and from the 63.9% it held in 3Q13. Cisco's service provider and enterprise router revenue declined -3.3% year-over-year.

HP's Ethernet Switch revenue increased more strongly than the rate of the overall market at 6.3% year over year and 5.0% quarter over quarter in 4Q14. HP's market share in switching now stands at 9.5%, up slightly from 9.3% in 3Q14 and also from the 9.2% share seen in 4Q13.

Juniper experienced a weaker quarter in Ethernet switching with a year-over-year decline of -8.3% in 4Q14, while rising 11.6% sequentially. Its router revenue declined year over year for the second consecutive quarter, falling by -16.3%.

"The Ethernet switch market continues to be a story of the ascendance of greater speeds and feeds, namely 10Gb and 40Gb Ethernet," said Petr Jirovský, Research Manager in IDC's Networking Trackers Group. "However, differences in deployment needs across different segments and geographies keep all speeds relevant to the overall market."

An interactive graphic showing the respective market revenues of the top 5 vendors in the worldwide Layer 2/3 Ethernet switch market over the previous five quarters is available here. The chart is intended for public use in online news articles and social media. Instructions on how to embed this graphic can be found by viewing this press release on IDC.com.

The Worldwide Quarterly Ethernet Switch Tracker and the Worldwide 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, 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 Ethernet switch and router trackers, please contact Kathy Nagamine ([email protected]).

About IDC Trackers

IDC Tracker products provide accurate and timely market size, vendor share, and forecasts for hundreds of technology markets from more than 100 countries around the globe. Using proprietary tools and research processes, IDC's Trackers are updated on a semiannual, quarterly, and monthly basis. Tracker results are delivered to clients in user-friendly excel deliverables and on-line query tools. The IDC Tracker Charts app allows users to view data charts from the most recent IDC Tracker products on their iPhone and iPad.

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter (News - Alert) at @IDC.

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