Ethernet Switch Market Fell 6.3% Year over Year; Router Market Increased 0.1% in 2Q20
The worldwide Ethernet switch market recorded $6.6 billion in revenue in the second quarter of 2020 (2Q20), a decrease of 6.3% year over year. Meanwhile, worldwide total enterprise and service provider (SP) router market revenues recorded a slight year-over-year gain, with a 0.1% increase in 2Q20 to nearly $4.0 billion.
The global response to the COVID-19 pandemic impacted results across both the Ethernet switch and router markets in the second quarter of 2020. Lockdowns imposed in numerous parts of the world caused many enterprises to pause investment plans. Meanwhile, hyperscalers, cloud providers, and communication service providers increased investments in response to growing demand. This created a dynamic environment with mixed results across various aspects of these markets, a trend that IDC expects to continue in the second half of 2020.
“In addition to there being varying trends across the enterprise, hyperscale, and service provider segments of both the Ethernet switch and router markers, there is also significant variation in second quarter results based on geography,” noted Petr Jirovsky, research director, IDC Networking Trackers. “Regions of the world where the COVID-19 pandemic subsided in the second quarter saw increases in their markets, while the response to the virus was ramping up during this period in parts of Europe and the Americas, representing a headwind.”
Ethernet Switch Market Highlights
From a geographic perspective, the Ethernet switch market saw year-over-year reductions in most global regions. A bright spot was China, which recorded a 25.4% year-over-year increase in 2Q20. The broader Asia/Pacific region (excluding Japan and China) fell by 6.7% year over year with Hong Kong’s Ethernet switch market dropping 35.8%. Japan’s market was off 3.0% from a year earlier.
There was also weakness across Europe and the Americas. Western Europe’s Ethernet switch market fell 13.1%, with the United Kingdom off 23.4% from a year earlier and France losing 20.5%. Central and Eastern Europe was down 7.6% with Hungary losing 20.1% year over year while the Czech Republic grew 17.6%. The Middle East and Africa region fell 7.5% with Qatar declining 17.1% but Israel gaining 7.6%. In the Americas, the United States was down 12.5% while Canada lost 16.5%. The Latin America region fell 22.1% with Mexico losing 21.6% compared to a year earlier.
“Softness in the Ethernet switch market in the first quarter of 2020 continued into the second quarter, driven primarily by the continued impact of the COVID-19 pandemic, which led to the lockdown of most economies worldwide,” says Brad Casemore, research vice president, Datacenter and Multicloud Networks at IDC. “Despite the headwinds of COVID-19, the Ethernet switch market stayed relatively healthy, most notably because of steady demand from hyperscalers and other cloud providers, which continue to invest in greater datacenter scale and higher bandwidths.”
Growth in the Ethernet switch market continues to be driven by the highest-speed switching platforms. For example, port shipments for 100Gb switches rose 51.2% year over year to 6.7 million units. 100Gb revenues grew 16.3% year over year in 2Q20 to nearly $1.5 billion, making up 22.4% of the market’s overall revenue. 25Gb switches also saw impressive growth with revenues increasing 39.0% to $505.9 million and port shipments growing 62.2%. Lower-speed campus switches, a more mature part of the market, saw mixed results in port shipments and revenue as average selling prices (ASPs) in this segment continue to decline. 10Gb port shipments rose 23.1% year over year, but revenue declined 6.1%. 10Gb switches make up 28.0% of the market’s total revenue. 1Gb switches declined 10.1% year over year in port shipments and fell 17.9% in revenue. 1Gb now accounts for 35.0% of the total Ethernet switch market’s revenue.
Router Market Highlights
The worldwide enterprise and service provider router market increased 0.1% on a year-over-year basis in 2Q20, with the major service provider segment, which accounts for 76.9% of revenues, growing 1.5% and the enterprise segment of the market declining 4.2%. From a regional perspective, the combined service provider and enterprise router market grew 18.1% year over year in China and was up 20.2% in Japan. The broader Asia/Pacific region (excluding Japan and China) fell 5.6% year over year. Revenues in Western Europe were off 10.4%, while the Central and Eastern Europe combined enterprise and service provider market declined 8.7%. The Middle East & Africa region was down 5.7% year over year. In the United States, the enterprise segment was down 12.0%, while service provider revenues fell 5.9%, giving the combined markets a 7.5% year over year drop. The Latin American market declined 2.6% on an annualized basis.