A pair of new reports found that Cisco last year continued its dominance of the global switch and router markets.
According to Synergy Research Group, the global market for switches and routers hit an all-time high of $12 billion in the fourth quarter of 2018. And for the full year, vendors generated $44 billion in revenues, up 4 percent from 2017.
“This large market keeps expanding slowly year after year,” said John Dinsdale, an analyst at SRG, in a statement. “We are not expecting this trend to change any time soon.”
SRG’s numbers showed that Cisco still dominates the market with 51 percent share of switches and routers in the fourth quarter of 2018. That was powerfully ahead of Huawei, Nokia, Juniper, Arista Networks, and Hewlett Packard Enterprise (HPE). Others tracked by SRG include Ericsson, Extreme, H3C, and ZTE.
Huawei’s market share keeps “nudging upwards” while Arista “has posed a big threat in large, high speed switches,” Dinsdale said.
The report found that Huawei took 14 percent of the switch and router market in the fourth quarter. Arista is only active in the switch market and predominantly in the higher-speed switches. Even so, as a relative newcomer, Arista has already grabbed 7 percent of the total switch market. In one of the high-speed switch segments, Arista has more than 50 percent market share, Dinsdale added.
However, he did add that “Cisco is not being shifted from its market leading position.”
Cisco Dominates Ethernet Market
A different report from 650 Group found that Cisco also dominates the global Ethernet switch market. That market itself increased 10 percent in 2018.
The firm found that Cisco controlled 59 percent of what it calls the enterprise/campus market in 2018. That was followed by HPE with 10 percent market share and Huawei with 8 percent market share. For the data center switch market, 650 Group had Cisco with 43 percent market share, followed by Arista with 13 percent share, Huawei with 8 percent share, and Juniper with 5 percent of the market.
By comparison, 650 Group said the routing market generated $17.5 billion in revenues last year. Combining routing and switching, the 650 Group found a total market of $48.5 billion, more than $4 billion above SRG’s tally of $44 billion.
Alan Weckel, an analyst at 650 Group, predicted that the data center switch market will remain “robust” in the next two years because of efforts to migrate workloads to the cloud. “It’s a very healthy market,” he said in an interview.
On the other hand, the market for campus/enterprise switching will grow in the low single-digits in the next two years and then flatten out. In five years, that market will begin to decline partly because more of the network connections will be via WLAN, Weckel said.
Huawei is expected to benefit from growth in its home market. The trade war and tariff impact involving China was minimal at the end of 2018, 650 Group noted, but could impact U.S. vendors selling into China in early 2019.
If trade talks result in tariffs or outright bans on products made in China, that could impact U.S. companies that build switches with components made in China. If a switch has a power supply, a copper connector, a board, or even sheet metal made in China, it could be subject to a tariff, which would raise prices, Weckel said.
The ultimate result of tariffs is that part of the switch production supply chain “will move out of China and never come back,” he said. “It is already happening.”