Ethernet Switch and Router Markets Show Moderate Growth in 2Q19

The worldwide Ethernet switch market (Layer 2/3) recorded revenues of $7.07 billion in the second quarter of 2019 (2Q19), an increase of 4.8% year over year, according to IDC. Meanwhile, total enterprise and service provider router market revenues grew 3.4% to $3.96 billion.

From a geographic perspective, the 2Q19 Ethernet switch market had mixed results across the globe. The Central and Eastern Europe (CEE) region grew 10.8% year over year, with Russia growing 9.2% and Poland growing 29.6%. The Middle East and Africa (MEA) region also had strong growth at 10.2%. Western Europe rose 1.1%, with the Netherlands growing 18.6% within the region.

The USA market grew 10.7% while Canada's market grew 3.8%. The Latin America region was off 1.2% after Brazil fell 8.3%. The Asia/Pacific (excluding Japan) (APeJ) region fell 4.2% year over year. China's market declined 4.7% year over year while Australia's market dropped 16.0%.

Growth in the Ethernet switch market continues to be driven by the highest-speed switching platforms in the market. For example, port shipments for 100Gb switches rose 58.3% year over year to 4.4 million. 100Gb revenues grew 42.9% year over year in 2Q19 to $1.28 billion, making up 18.1% of the market's revenue, compared to 13.2% of the market's revenue a year earlier.

25Gb switches also saw impressive growth, increasing 84.8% to $364.1 million, with port shipments growing 74.5% year over year. Lower-speed campus switches, a more mature part of the market, continue to see moderate growth. 10Gb port shipments rose 2.6% year over year, to make up 27.9% of the market's revenue. 1Gb switches grew 6.6% year over year in port shipments, making up 40.0% of the market's total revenues.

The router market grew 3.4% with the major service provider segment, which accounts for 75.9% of revenues, increasing 2.0% and the enterprise segment of the market growing a healthy 8.0%. From a regional perspective, the combined service provider and enterprise router market increased 2.7% in APeJ. Japan's total market grew 7.0%.

Revenues in Western Europe rose 5.2%, while the CEE combined enterprise and service provider market grew 15.2% year over year. The MEA region was up 7.4%. In the USA, the enterprise segment was up 18.8%, but service provider revenues fell 6.4. Canada's market rose 9.2% and the Latin American market grew 8.1%.

Cisco finished 2Q19 with an 6.8% year-over-year increase in overall Ethernet switch revenues and market share of 51.1%. Cisco's combined service provider and enterprise router revenue rose 6.6% year over year, with enterprise router revenue increasing 16.2% and SP revenues growing 1.1%. Their combined SP and enterprise router market share increased to 36.8%, up from 35.7% in 2Q18.

Huawei's Ethernet switch revenue rose 18.9% on an annualized basis, giving the company market share of 9.7%. The company's combined SP and enterprise router revenue rose 1.5% year over year with a market share of 31.1%.