Switches and Routers Show Continued Growth in 4Q17 and Full Year 2017

The worldwide Ethernet switch market recorded $6.9 billion in revenue in the fourth quarter of 2017 (4Q17), an increase of 3.2% year over year, according to IDC. For the full year 2017, the market recorded more than $25.7 billion in revenue for a year-over-year growth rate of 5.4%.

Meanwhile, the worldwide total enterprise and service provider (SP) router market recorded just under $4.0 billion in revenue in 4Q17, increasing 2.4% on a year-over-year basis. For the full year 2017, the router market finished at $15.2 billion, an increase of 4.0% over 2016.

From a geographic perspective, the 4Q17 Ethernet switch market recorded its strongest growth in the Asia/Pacific (excluding Japan) (APeJ) region, which increased 11.1% year over year in 4Q17 and was up 11.3% for the full year 2017. 100Gb Ethernet switch revenue continues to grow rapidly as adoption by hyperscale cloud providers and large enterprises accelerates. 100Gb shipments reached more than 1.3 million ports and $661 million in revenue in 4Q17. 100Gb now accounts for 9.6% of total market revenue, up from just 4.8% in the same quarter a year ago.

25Gb/50Gb Ethernet switch products continue to gain traction. Shipments exceeded 1 million ports with $124 million in revenue in 4Q17. Growth in 25Gb, 50Gb, 100Gb continue to negatively impact the 40Gb segment. 40Gb port shipments decreased 6.9% year over year and revenue was down 11.2% for all of 2017. The 10Gb market continues to see healthy growth but pricing pressure is holding back revenue increases. 10Gb shipments in 4Q17 grew 37.2% year over year while revenues decreased 2.7%.

Meanwhile, 1Gb remains the primary connectivity technology for enterprise campus and branch deployments, driving 1Gb port shipments to 112.6 million in 4Q17, growing 5.4% year over year with market share remaining steady at 66.7% of all ports shipped. In terms of revenue for 4Q17, 1Gb was up sequentially 0.5% but decreased 4.0% year over year and was down 0.5% for the full 2017 year. For the full year 2017, 1Gb made up 42.4% of the overall market's revenue while 10Gb accounted for 34.7%.

The worldwide enterprise and service provider router market grew 2.4% on a year-over-year basis in 4Q17 with the larger service provider segment rising 1.4% and the enterprise portion growing 5.3%. For the full year, the combined market increased 4.0% with the service provider segment driving 5.7% growth and the enterprise segment declining 1.1%.

Cisco finished 4Q17 with a 1.4% year-over-year decline in Ethernet switching and market share of 53.0%. For the full year 2017, Cisco switching revenues rose 1.5% over 2016 while recording 54.9% market share (compared to 57.0% in 2016). Cisco saw its combined service provider and enterprise router revenue decrease 10.5% year over year in 4Q17. For the full year, Cisco's combined router revenues finished at $6.2 billion, a decrease of 5.8% from 2016.

Huawei continued to perform well in both the Ethernet switch and the router markets. Huawei's Ethernet switch revenue grew 8.1% year over year in 4Q17 for a market share of 10.3%. For the full year 2017, Huawei's Ethernet switch revenues grew 24.5% leading to a market share of 8.3%. Huawei's enterprise and SP router revenue increased 53.9% year over year in 4Q17 to reach 28.2% of the total router market in 4Q17 compared to 18.7% in 4Q16. For the full year, Huawei's combined router revenue of $3.6 billion was an increase of 40.3% from 2016, giving the company a market share of 23.8%.