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June 2, 2014

Q1 shipments show falling demand for Ethernet switches and routers

The market for Layer 2 and 3 Ethernet switches fell by nearly $1bn.

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The market for Ethernet switches and routers got off to a slow start in 2014 but just how slow depends on which analyst you follow.

The market for Layer 2 and 3 Ethernet switches fell by $1bn in the first quarter of 2014 compared with the fourth quarter of 2013, to $5bn, according to research firm Dell’Oro Group.

Meanwhile, IDC says the market hit $5.2 billion, a decline of 12.3% compared to the same period last year, as revenues for routers dropped 12.5%.

Both firms blamed Cisco and enterprises switching for more wireless connectivity on the Layer 2 / 3 Ethernet decline.

Cisco, which still holds more than 60% of the Layer 2, 3 markets, saw revenues for decline by 4.3% year-over-year, while revenues for routers dipped by 1.8%, according to IDC.

Rohit Mehra, VP of network infrastructure at IDC, said: "10GbE and 40GbE switch ports for the data centre and campus core remain the growth engine for this market, although we do expect the GbE market to hold its own with port shipments during the coming years."

Dell’Oro added that there was a "pause" in the data centre switching market in the quarter, due to the transition to Cisco’s new 9000 series switches, which Cisco introduced in November 2013.

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HP added 4.6 percent Ethernet switch revenue, while Juniper rose 53.4 percent for the same segment over the same period.

Petr Jirovský, research manager in IDC’s networking trackers group, said: "With data centres seeing ever-increasing application workloads, 10Gb and 40Gb Ethernet is the greatest driver of today’s Ethernet switch market."

"However, regional variations in the market persist and vendors are cautioned to take this into account while working on their near- to mid-term go-to-market strategies."

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