Campus switching has changed dramatically over the last three years as new features that support digital transformation and the subscription-based business models have gained greater acceptance. This has opened new opportunities for emerging suppliers to take on dominant players like Cisco, said Sameh Boujelbene, senior research director at Dell’Oro Group.

Cisco just a few years ago controlled two-thirds of the market, with other substantial players like Hewlett Packard Enterprise (HPE) and Huawei each controlling less than 10% market share, Boujelbene noted in an interview with SDxCentral. Now, campus switching is entering a new era of growth led by new players flooding into the space thanks to new virtualization use cases.

“We saw the emergence of new entrants like Arista [who] are investing in campus switches,” Boujelbene said in an interview with SDxCentral. The existing players such as Juniper and HPE now focus on the campus strategy in general that includes an umbrella of solutions for SD-WAN, security, switches, and wireless LAN, she added. 

Campus vendors have made a number of recent acquisitions in order to boost their market opportunities. Boujelbene pointed to Juniper's acquisition of Mist Systems, Arista buying Mojo Networks, HPE swallowing Silver Peak, and Extreme purchasing Infovista's SD-WAN division.

Changing market dynamics prompted Dell’Oro Group to slightly increase its 2021 campus switch market forecast from its initial 2% growth expectation to now expecting 3% growth. However, the firm does not expect the market to hit pre-pandemic revenue levels until 2022, Boujelbene said.

She noted that the market declined 4% in 2020, which was much less than what they feared. The overall market was bolstered by China, which recorded a 3% increase in revenues last year and those total revenues accounted for around one-fifth of the global market.

“The [market] share shifts in 2020 have more to do with how each region performed, and because China recovered faster than other regions that really benefited the Chinese vendors like Huawei,” Boujelbene said.

Even though Cisco’s share over the last four years has been hovering around 55%, the firm is seeing rising competition from other vendors such as Arista, Extreme, HPE, and Juniper. HPE and Arista gained revenue share in 2020 and Juniper is gaining momentum with the Mist acquisition, according to Boujelbene.

The COVID-19 pandemic showed that digitized processes made it easier to support the rapid shift in remote work. Boujelbene said that companies that had digital transformation and automation plans on their roadmap have since pulled in those timelines by at least two years.

“The pandemic accelerated the pace of digital transformation,” she said. “Everyone is talking about holding budgets on many projects except automation projects.”

Accelerated digitalization means adding more IoT devices and sensors to replace humans. Although the majority of IoT devices will be wireless, some devices and sensors, such as security cameras and industrial lighting, remain on wired Ethernet, according to the Dell'Oro report.

An increasing number of IoT devices need the latest version of switches, such as the higher-priced power over Ethernet (PoE)-compatible switches, that support new features to accommodate automation, analytics, and security functions. Boujelbene forecasts that the PoE ports will compose nearly half of total campus-switch ports by 2025. 

Even though some switches are not old enough to be replaced, companies are being forced to refresh or upgrade them sooner than expected, she said, adding that the digitalization transformation accelerated the pace of the upgrade cycle on campus switches, which drives the market revenue. “That’s a major reason why the pandemic’s ... upside [impact] is offsetting the downside,” Boujelbene said.

UPDATE: This story has been updated to clarify comments on Cisco’s share.