Enterprise Routers and Switches
A router is a physical device that is used to connect multiple networks (at the enterprise premises) i.e. it act as a dispatcher selecting best route for the information transmission Switches focuses on channeling incoming information or data from multiple inputs to specific output ports.
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The average annual savings achieved in Enterprise Routers and Switches category is 10.60%
The industry average payment terms in Enterprise Routers and Switches category for the current quarter is 127.5 days
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Enterprise Routers and Switches market report transcript
Enterprise Routers and Switches Market Analysis and Global Outlook
The recent outbreak of COVID-19 around the world has hit the categories of network equipment, including Ethernet Switch, Routers in both enterprise and service provider segments
The sales of these categories declined by 14 percent in Q1 2020 compared to the last year Q1 2019
The huge decline in the network equipment categories was due to supply chain challenges and the slowing down of router investments during this quarter
In Q4 2018, the service provider and enterprise router market share reached $4.3 billion, witnessing a significant Y-o-Y growth rate of 16 percent. APeJ led the market, in terms of revenue, growing at a Y-o-Y rate of 22.4 percent, followed by MEA, witnessing a growth rate of 17.6 percent
Western Europe and the US witnessed a Y-o-Y growth rate of 12.9 percent and 12.4 percent, respectively, in Q42018. This is owing to the disrupting traditional routing architecture and WAN transport services market. Weak CAPEX from major communication service providers hindered the growth
The estimated market size for ethernet switches in Q4 2018 is $7.80 billion. The router market size for the same period is estimated at $4.6 billion
The major end-user industries for ethernet switches and routers are cable service providers, communication operators, education, government, information technology, mobile, financial services
Most of the major network hardware vendors have a global presence. Few vendors have a very strong presence in APAC
North America and Europe are considered to be the mature markets, whereas APAC is considered as the emerging markets. The Middle East and African markets have a low maturity.
Key Network Hardware Components
- In an Ethernet LAN, a switch determines the destination, where a message has to be sent based on the MAC address in the message•Switches initially performed only the data link layer function (layer 2), whereas the newer version of switches perform routing functions (layer 3) and are also called IP switches
- Switches are classified based on their speed, form factor and operating layer
- A router controls the flow of information within a network
- A router also acts as a hardware firewall for systems connected to high-speed internet connections such as cable, satellite or DSL
- A router operates in layer three of the open systems interconnection model
SDN – Cost Breakup
- SDN can offer immediate costs savings of about 50 percent for large data centers when compared to the existing hardware
- The savings potential over the years may decrease with the size of the network, however, savings in the range of 30 to 50 percent can be achieved
Google has implemented SDN-based devices in their internal network, which interconnects their data centers and has claimed to have achieved increased efficiency through network utilization of up to 95 percent, which has reduced their OPEX
Cost Breakup - Typical Hardware vs. SDN Hardware
SDN facilities implementation of multi-brand equipment in the same architecture, which leads to reduction of acquisition cost
The efficiency of the network is increased through automation,leading to reduction in maintenance and administrative costs
Drivers and Constraints
- Increase in growth of internet-enabled devices and growing demand for IP telephony devices are the key factors steering the growth for network hardware industry
- Major factors hindering growth for network hardware industry include the risk of information theft and increasing adoption of low-cost alternatives such as Skype and Google Hangouts
- Growth in the Usage of Internet-Enabled Devices: To support the rapid increase in an adoption of internet-enabled devices and trends such as BYOD, new network infrastructure is required, which in turn is fueling the growth of the network hardware market.
Growing demand for hyperscale datacenters: Enterprises and service providers are opting for hyperscale datacenters (because of the growing IP traffic) that are built with multistage circuit switching networks. Such datacenters require deployment of several routers and switches, and the required amount of server capacity for bandwidth and pipes to cross-connect would be more than 100,000
- Safety of Cloud Usage and Security of Information: Though network security features have advanced in recent years, there still exist concerns regarding the security of information in the cloud by some verticals, such as pharmaceutical and BFSI.
- Low Cost Alternates to Telepresence: Enterprises are opting for alternatives such as Google Hangouts, Skype, Apple Facetime and other such applications as low-cost alternatives to established telepresence solutions
Procurement Practices: Sourcing Models for Network Hardware
- Enterprises generally prefer a multi-vendor model when procuring network hardware
- The multi-vendor sourcing model offers better cost-saving opportunities
- Most Fortune-500 firms prefer the bi-vendor regional sourcing model to reduce risks and to encourage competition
- The typical contract duration ranges from a period of three to five years depending on the maintenance contract, depreciation of the equipment and technological advancements.