Adoption of 10GbE technology grew in data centres, but this could not offset slow sales in the US, Western Europe and elsewhere, according to IDC
The worldwide Ethernet switch market, which had grown in large part due to the adoption of 10 Gigabit Ethernet technology in the data centre, contracted in the third quarter, with revenue dropping 4.4 percent, according to analysts with IDC.
Numbers issued by IDC on 30 November indicated that globally, Ethernet switch revenue came in at $5.36 billion (£3.32bn), a decrease from what the analysts called a “very strong” third quarter in 2011. The market saw some growth around the world, but was hurt by declines in the United States, the Asia-Pacific region (excluding Japan), and Western Europe, which is still in the grip of a recession.
“The surprising decline in the Ethernet switch market after several quarters of positive growth is a result of several factors, but the highlight was that the slower growth in the 10GbE core segment of the market could not completely offset the decline in the network edge/access segment,” Rohit Mehra, vice president of network infrastructure at IDC, said in a statement. “10GbE, along with the emerging 40GbE Ethernet switch segments, are the ones to watch as growth in virtualised applications and converged infrastructure will continue to drive the need for advanced networks in data centre build-outs.”
The analysts’ numbers mirror similar findings from market research firm Infonetics Research, which found that third-quarter revenue for the service provider router and switch market – which includes IP edge and core routers and Ethernet switches – fell 5 percent from the same period in 2011, coming in just less than $3.4 billion. Regionally, revenue dropped where the economy was struggling the most, according to Michael Howard, principle analyst for carrier networks at Infonetics.
“The performance of the router/switch market roughly reflects economic conditions, and true to form, economic weakness in Europe, North America and Latin America drove down IP router and switch revenue in the third quarter,” Howard said in a statement. “[Europe, the Middle East and Africa] posted another negative quarter amid the ongoing fiscal crisis in Europe, and we may not see much of the usual final-quarter budget flush, as it seems just as the European Commission gets closer to economic steadiness, more negative reports arrive.”
In the router space, Infonetics found that Cisco Systems continues to hold a strong lead in market share, but that Juniper Networks had regained the second-place position from Huawei Technologies. Alcatel-Lucent retained the third spot, while Huawei fell to number four.
In all, those four vendors made up 88 percent of the total IP router revenue in the third quarter, the analysts said.
According to IDC analysts, Cisco is continuing to dominate the Ethernet switch market, though its share of the market dropped. In the third quarter, Cisco’s share was 62.2 percent, a decline from 65.6 percent in the same period last year. In the fast-growing and highly competitive 10GbE space, Cisco holds 68.3 percent of the market.
Revenue in the 10GbE space jumped 10.7 percent, while 10GbE port shipments rose 61.4 percent, IDC analysts said.
Despite the disappointing overall numbers from the Ethernet switch market, the same trends that have fueled the growth in recent quarters – including bring your own device (BYOD) and video – are still growing, boding well for the networking industry, according to Petr Jirovsky, senior research analyst in IDC’s Networking Trackers Group.
“While on the one hand the overall market suffered from increased macroeconomic uncertainty and weakness in the public sector in many regions, the year-over-year comparisons were harder this time around because of the stronger performance of the market in the same period last year,” Jirovsky said in a statement. “That said, the overall market drivers, such as the proliferation of video traffic on the network, and the need to support mobility and BYOD at the network edge, will continue to keep the enterprise networking market relevant over the longer term.”
Do you know all about IBM, the founder of the IT industry?Take our quiz!
Originally published on eWeek.