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 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% 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 data centres seek greater capacity to deliver a feverishly proliferating ecosystem of enterprise and cloud applications,” says Rohit Mehra, vice-president: network infrastructure at IDC. “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 5,4% 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% year-over-year in 4Q14.
Cisco 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% 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,” says Petr Jirovsky, 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.”
