Switches Show Solid Growth in 2Q18 While Routers See Mixed Results

The worldwide Ethernet switch market (Layer 2/3) recorded $6.7 billion in revenue in the second quarter of 2018 (2Q18), an increase of 4.8% year over year, according to IDC. Meanwhile, the worldwide total enterprise and service provider (SP) router market recorded $3.8 billion in revenue in 2Q18, decreasing 2.5% on a year-over-year basis.

100Gb Ethernet switch revenue continues to grow rapidly as adoption by hyperscale cloud providers and large enterprises accelerates. 100Gb shipments reached more than 2.8 million ports and $893.5 million in revenue in 2Q18. 25GbE switch products continue to gain traction with shipments exceeding 2.0 million ports and $197 million in revenue in 2Q18. Port shipments of 40GbE, meanwhile, grew 2.1% year over year, but price erosion for these products led revenues to fall 13.5% compared to last year.

The 10Gb market continues to see healthy growth but pricing pressure is also holding back revenue increases. 10Gb shipments in 2Q18 grew 22.8% year over year but revenues dropped 5.2%. Meanwhile, 1Gb remains the primary connectivity technology for enterprise campus and branch deployments, driving 1Gb port shipments to 109.9 million in 2Q18, growing 6.1% year over year with market share remaining steady at 66.6% of all ports shipped. In terms of revenue, 1Gb was up 1.4% year over year.

The worldwide enterprise and service provider router market fell 2.5% on a year-over-year basis in 2Q18 with the service provider segment, which accounts for 76.9% of the market, declining 3.9% and the enterprise portion growing 2.5% year over year. The service provider segment was negatively impacted by weak CAPEX spending by major communications service providers, especially in the United States.

Cisco finished 2Q18 with a 3.9% year-over-year decline in Ethernet switch revenues and market share of 50.1%. In the fast growing combined 25Gb/50Gb/100Gb segment, Cisco is the market leader with 34.6% revenue share, which is down from the 41.2% share it held in 2Q17. Cisco saw its combined service provider and enterprise router revenue decrease 15.2% year over year in 2Q18, while its market share came in at 35.7% in 2Q18, down from 41.0% in 2Q17. Enterprise router sales were off 7.9% while service provider sales fell 18.9% year-over-year.

Huawei continued to perform well in both the Ethernet switch and the router markets on an annualized basis. Huawei's Ethernet switch revenue grew 24.1% year over year in 2Q18 for a market share of 10.0%, up from 8.5% in 2Q17. Huawei's enterprise and service provider router revenue increased 23.3% year over year to finish with 31.7% share compared to 25.1% of the total router market in 2Q17.