European Enterprise Networking Market Records Strong Quarter

The European Networking market grew by 32.6% year on year in the first quarter of 2023, according to IDC. The market is continuing its extremely strong performance throughout 2022 and defying expectations of a slower start to the year.

Within the overall market, WLAN and non-datacenter ethernet switching together accounted for the majority of market value. In 1Q23, these two segments grew by 47.3% and 45.2%, respectively. While increasing prices have been driving market value up, these technologies recorded powerful growth in terms of shipments (volume) as well.

From a technology perspective, the aforementioned top markets are driven by strong demand for Wi-Fi 6/6E products and corresponding upgrades of access and campus switching. Networking technologies such as datacenter and non-datacenter ethernet switches, WLAN, and routers are all facilitators of digital transformation initiatives carried out by European organizations.

Enterprise digital transformation was accelerated during and after the COVID-19 pandemic, but it has been conversely hampered by related supply-chain issues. Nevertheless, IDC's discussions with leading market vendors suggest a significant shortening of shipping times for enterprise networking equipment, while organizations are expected to take some time to “digest“ the recently implemented networking upgrades.

Despite the European Networking market performing surprisingly well during 1Q23, a significant market slowdown this year is still expected. According to recent IDC surveys of European organizations' investment sentiments in 2023, the majority expect a recession of uncertain intensity, which is likely to make them cautious in terms of spending for the remainder of the year.

"As the backlog on the non-datacenter ethernet switching market was clearing in the first quarter, we forecast total European enterprise networking market spending to post a significantly lower growth rate than in 2022 and Q1 2023, at around 3.5% for the remaining quarters," says Peter Kosinar, program manager for European Networking Infrastructure Solutions at IDC.