Ethernet Switch and Router Markets Decline in 1Q20

The Worldwide Ethernet switch market recorded $6.16 billion in revenue in the first quarter of 2020 (1Q20), a decrease of 8.9% year over year, according to IDC. Meanwhile, the worldwide total enterprise and service provider (SP) router market revenues fell 16.4% year over year in 1Q20 to $2.99 billion.

A variety of factors led to the weakening of these markets across the globe. Despite the Ethernet switch market growing 2.3% for the full year 2019, in the fourth quarter of 2019 the market fell 2.2%, indicating that the market's slow end to 2019 spilled into 1Q20. The first quarter of 2020 was also impacted by the COVID-19 pandemic that swept across the world throughout the quarter, specifically disrupting supply chains while weakening customer demand. IDC expects the negative impact of COVID-19 on both the Ethernet switch and router markets to continue in the second quarter of 2020.

Growth in the Ethernet switch market continues to be driven by the highest speed switching platforms. For example, port shipments for 100Gb switches rose 52.1% year over year to $5.5 million. 100Gb revenues grew 9.9% year over year in 1Q20 to $1.28 billion, making up 20.8% of the market's revenue. 25Gb switches also saw impressive growth, with revenues increasing 58.9% to $482.9 million and port shipments growing 67.7% year over year.

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 3.9% year over year, but revenue declined 21.4%. 10Gb switches make up 24.8% of the market's total revenue. 1Gb switches declined 3.8% year over year in port shipments and fell 11.9% in revenue.1Gb now accounts for 39.0% of the total Ethernet switch market's revenue.

The worldwide enterprise and service provider router market decreased 16.4% on a year-over-year basis in 1Q20, with the major service provider segment, which accounts for 75.1% of revenues, decreasing 16.8% and the enterprise segment of the market declining 15.3%. From a regional perspective, the combined service provider and enterprise router market fell 29.4% in APeJC. Japan's total market grew 8.4% year over year and the People's Republic of China market was off 10.9%.

Revenues in Western Europe declined 23.5% year over year, while the combined enterprise and service provider market in the CEE region declined 17.1%. The MEA region was down 5.2%. In the U.S., the enterprise segment was down 12.2%, while service provider revenues fell 19.6%, giving the combined markets a year-over-year drop of 17.5%. The Latin America market declined 15.9% on an annualized basis.

Cisco finished 1Q20 with a 12.0% year-over-year decline in overall Ethernet switch revenues and market share of 51.9%. Cisco's combined service provider and enterprise router revenue declined 28.1% year over year with market share at 36.3%. Huawei's Ethernet switch revenue declined 14.0% on an annualized basis, giving the company a market share of 8.4%. The company's combined SP and enterprise router revenue declined 2.1% year over year, resulting in a market share of 28.8%.