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“Healthy” Cisco leads Ethernet market as Juniper weakens

"The Ethernet switch market continues to be a story of the ascendance of greater speeds and feeds, namely 10Gb and 40Gb Ethernet."

Worldwide Ethernet switch market revenues reached a record $6.2 billion in the fourth quarter of 2014 (4Q14), representing an increase of 3.8 percent year over year and 3.6 percent over the previous quarter.

According to the preliminary results published by International Data Corporation (IDC), for the full year 2014, the market expanded by 3.9 percent over 2013.

Meanwhile, the worldwide total router market reversed recent year-over-year declines, growing 2.5 percent year over year and 5.6 percent sequentially yet the router market contracted -0.6 percent for the full year 2014.

From a geographic perspective, the Asia/Pacific region, including Japan (APJ), was essentially flat year over year (increasing 0.7 percent), but was more in line with global results sequentially (up 4.1 percent).

“Despite precipitous price erosion, 10Gb Ethernet is the primary growth driver of the Ethernet switching market, with 40Gb Ethernet growing in stature quickly, as data centres seek greater capacity to deliver a feverishly proliferating ecosystem of enterprise and cloud applications,” says Rohit Mehra, VP Network Infrastructure, IDC.

"The 1Gb Ethernet market remains important to the enterprise campus network, although price declines will potentially challenge market growth."

According to IDC, 10Gb Ethernet switch revenue increased 5.2 percent year over year to reach $2.3 billion while 10Gb Ethernet switch port shipments grew a robust 24.4 percent year over year to reach nearly 6.8 million ports shipped in 4Q14 as average selling prices continue to fall.

Meanwhile, 40Gb Ethernet continues to rapidly grow as a stand-alone segment and now accounts for more than $520 million in revenue per quarter with year-over-year growth of more than 100 percent - 10Gb and 40Gb Ethernet continue to be the primary drivers of the overall Ethernet switch market.

Globally speaking

The worldwide enterprise and service provider router market increased 2.5 percent year over year in 4Q14.

However, performance of the key segments within the router market varied widely with the service provider segment increasing 5.4 percent year over year while the enterprise segment continued to struggle, falling 5.1 percent year over year.

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The router market also saw varied performance on a regional basis. Latin America, Asia/Pacific, including Japan (APJ), and EMEA all saw year-over-year growth, with increases of 13.9 percent, 6.8 percent, and 6.1 percent, respectively yet the story was very different in North America as the router market declined -5.0 percent year over year in 4Q14.


Cisco had a healthy quarter in Ethernet switching with 3.8 percent year-over-year growth in 4Q14, although its market share declined to 61.1 percent from 62.9 percent in the previous quarter - Cisco also stood at 61.1 percent in the fourth quarter of 2013.

In the hotly contested 10GbE segment, Cisco held 59.3 percent of the market in 3Q14, down from 63.7 percent in the previous quarter, and from the 63.9 percent it held in 3Q13 while the vendor’s service provider and enterprise router revenue declined -3.3 percent year-over-year.

HP's Ethernet switch revenue increased more strongly than the rate of the overall market at 6.3 percent year over year and 5.0 percent quarter over quarter in 4Q14.

Consequently, HP's market share in switching now stands at 9.5 percent, up slightly from 9.3 percent in 3Q14 and also from the 9.2 percent share seen in 4Q13.

Juniper experienced a weaker quarter in Ethernet switching with a year-over-year decline of -8.3 percent in 4Q14, while rising 11.6 percent sequentially - its router revenue declined year over year for the second consecutive quarter, falling by -16.3 percent.

"The Ethernet switch market continues to be a story of the ascendance of greater speeds and feeds, namely 10Gb and 40Gb Ethernet," adds Petr Jirovský, Research Manager, IDC Networking Trackers Group.

"However, differences in deployment needs across different segments and geographies keep all speeds relevant to the overall market."