Routers and Switches Market Outlook
Until Q2 2018, the Ethernet switch market was likely at $6.7 billion, and the enterprise router market was valued at $3.8 billion
The market was driven by significant demand of 100 GB Ethernet switches in regions, such as APeJ, which depicted Y-o-Y growth rate of 16.6 percent in Q2 2018. Central and Eastern Europe witnessed Y-o-Y growth rate of 5.4 percent for Q2 2018. Regions, such as MEA and Western Europe, witnessed a growth of 7 percent and 4.3 percent, respectively. The US witnessed a declining Y-o-Y growth rate of 1.6 percent. Growth in the switches market is attributed to the growing usage of 100 GbE switches (datacenter deployment), increasing demand for cloud up gradations toward WAN connectivity and mobility in the enterprise segment.
In Q2 2018, the enterprise and service provider router market reached $3.8 billion, witnessing a decline of 2.5 percent.APeJ led the market, in terms of revenue, growing at a Y-o-Y rate of 8.6 percent, followed by MEA, witnessing a growth rate of 6.1 percent. The Central and Eastern Europe witnessed Y-o-Y growth rate of 1.7 percent, in Q2 2018, while the US witnessed a Y-o-Y decline of 16.5 percent. This is owing to the disrupting traditional routing architecture and WAN transport services market. Weak CAPEX from major communication service providers hindered the growth
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
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