Worldwide Ethernet switch and Router Market on the Wing

The worldwide Ethernet switch market (Layer 2/3) reached US$5.66 billion in the third quarter of 2013, representing an on-year increase of 6.5%. On a sequential basis the third quarter of 2013 increased 5.2%. Meanwhile, the worldwide router market jumped 7.8% on year, which was the highest annual growth rate seen in over two years. Sequentially, the router market increased 2.2%.

From a geographic perspective, third-quarter results show the Ethernet  switch market had its highest growth in Middle East and Africa (22.7% on year) and very good growth in North America (12% on year). Latin America and Asia Pacific (excluding Japan) both grew in the mid-single digits while the Western Europe and Central and Eastern Europe regions were up in the 1-2% range. Meanwhile, Japan declined 13.4% on year in the third quarter of 2013.

10Gb Ethernet  switch (Layer 2/3) revenues increased 12% on-year while 10Gb Ethernet switch port shipments grew 40.1% on year to 4.97 million ports in the third quarter of 2013. 10GbE continues to be the primary driver of the overall Ethernet switch market, with the early stage 40GbE just starting to reach critical mass as a stand-alone segment.

The worldwide enterprise and service provider router market also performed well in the third quarter of 2013, increasing 7.8% on year and 2.2% sequentially in the quarter. Regionally, results were quite uneven, ranging from more than 30% growth in Middle East and Africa and Central and Eastern Europe to a significant 26.3% decline in Japan. North America increased 14.8% on year while Western Europe and Latin America were up high single digits. Asia Pacific (excluding Japan) declined 1.5% on year in the third quarter of 2013.

From a vendor perspective, Cisco's Ethernet  switch (Layer 2/3) market share in the third quarter of 2013 held steady from previous quarter at 62.3%. Cisco's market share in the fast-growing 10GbE market segment was 65.9% in the third quarter of 2013. HP's Ethernet switch revenues increased 5.3% on quarter and 6.5% on year in the third quarter of 2013 on par with the overall market. HP's market share now stands at 9.4% in the third quarter of 2013.

With the unified enterprise network edge gaining market traction and new applications for the Internet of Things continuing to emerge, Gigabit Ethernet (GbE) is expected to hold its own for the foreseeable future. Of course, noticeable regional and country-level variances continue to be seen, so vendors are best advised to take those into consideration while working on their near to mid-term strategies.

IDC: Ethernet  switch revenues by vendor, 3Q2012-3Q2013 (US$m)
	3Q 2012	4Q 2012	1Q 2013	2Q 2013	3Q 2013
Cisco	3328.85	3506.59	3310.39	3365.28	3543.95
HP	498.31	532.76	459.8	507.91	531.77
Alcatel-Lucent	167	172.8	185.03	199.42	204.36
Juniper	142.86	144.22	130.49	160.77	150.63
Dell	96.94	121.73	124.13	96.18	111.14
Others	1080.64	1209.79	1023.94	1055.33	1120.4