Ethernet Switch and Router Trackers Show Improvement in 1Q18

The worldwide Ethernet switch market (Layer 2/3) recorded $6.29 billion in revenue in the first quarter of 2018 (1Q18), a healthy increase of 10.9% year over year, according to IDC. Meanwhile, the worldwide total enterprise and service provider (SP) router market recorded $3.31 billion in revenue in 1Q18, a 1.4% decrease on a year-over-year basis.

From a geographic perspective, the 1Q18 Ethernet switch market recorded its strongest growth in the Asia/Pacific (excluding Japan) (APeJ) region, which increased a solid 21.0% year over year. Central and Eastern Europe (CEE) was another standout region, growing 19.5%, the Middle East & Africa (MEA) region recorded 11.7% growth, while the United States, the world's largest market, was up 7.0% year over year to $2.44 billion. The Latin America (LA) region's growth continued to lag, up only 1.2%. Japan, meanwhile, dropped 2.0% year over year.

The Ethernet switch market's 10.9% growth in 1Q18 is a strong uptick from the 3.5% growth recorded year over year between 1Q16 and 1Q17. The quarter's growth also outpaced the full year 2017 growth of 5.5%, which bodes well for the market's future outlook. The worldwide enterprise and service provider router market contracted 1.4% on a year-over-year basis in 1Q18 with a decrease of 2.7% in the enterprise segment and a decrease of 0.9% in the larger service provider routing market.

The combined enterprise and service provider router market saw varied regional performance in 1Q18. The APeJ region again significantly outperformed all other regions with its 13.3% year-over-year growth. Western Europe rose 2.6%, MEA grew 2.1%, and LA increased 1.3%. Other regions all declined on an annual basis. Japan's market contracted a significant 35.5% year over year while the U.S. market was down 11.4% year over year.

Cisco finished 1Q18 with a year-over-year increase of 7.6% in Ethernet switching revenues and a market share of 53.4%, down from its 55.0% share in 1Q17 and down from 58.9% in 1Q16. Huawei continued to perform well in both the Ethernet switch and the router markets on an annualized basis. Hewlett Packard Enterprise's (HPE) Ethernet switch revenue grew 11.1% from 1Q17 to 1Q18 and its market share held steady at 6.0% during that time.

Arista Networks performed well in 1Q18, with its Ethernet switching revenue rising 39.9% year over year, earning a market share of 6.5%, up from 5.1% in 1Q17. Juniper's Ethernet switch revenue fell 4.8% year over year in 1Q18, bringing its market share to 3.7% compared to 4.3% in 1Q17.