Cisco, HP Still Lead Growing Ethernet Switch Market: Infonetics

The uncertain global economy didn't slow sales for Ethernet switches, with drivers such as virtualization and mobility fueling revenue growth, analysts said.

Cisco Systems and Hewlett-Packard lost share in the competitive global Ethernet switch market in the second quarter, though the top two vendors did see revenue grow, according to market research firm Infonetics Research.

Juniper Networks also saw revenue increase, and Dell-a relative newcomer to the enterprise networking space-had revenue grow in the double-digit percentage points over the same period last year, thanks in large part to its acquisition last year of Force10 Networks, Infonetics analysts said.

Despite the uncertain global economic picture, demand for Ethernet switches continued to grow in the second quarter, according to Infonetics' numbers, released Sept. 4. Overall revenue worldwide jumped 13 percent from the second quarter of 2011, topping $5 billion. The market is seeing continued demand for Gigabit Ethernet switches, even as businesses continue to migrate to 10 Gigabit Ethernet (10GbE) and even 40GbE devices, analyst Matthias Machowinski said.

"All the negative economic news in the world didn't keep Ethernet switch buyers from propelling the market past $5 billion in sales this quarter," Machowinski said in a statement. "Sales in North America, the largest Ethernet switch market, did especially well, providing an important boost to the overall market. As usual, demand for 10G switches was strong, almost doubling from a year ago, and the 40G Ethernet market is taking off, as vendors round out their 40G solution portfolio."

Gigabit Ethernet ports still constitute the largest part of the Ethernet switch market, according to Infonetics, and revenue in the segment was up in the second quarter. Meanwhile, sales of 40GbE ports grew 50 percent for the second quarter in a row.

The numbers from Infonetics echo what other analyst firms are seeing in the Ethernet space. IDC analysts said in August that second-quarter revenue hit $5.5 billion, an 8.5 percent increase, while 10GbE port sales jumped 22.9 percent. The growth in Ethernet switch revenue despite the global economic situation shows how important a role networking plays in IT infrastructure deployments, according to Rohit Mehra, director of the Enterprise Communications Infrastructure business at IDC.

"10GbE along with the emerging 40GbE Ethernet switch segments are leading the market to higher levels, clearly proving the point that growth in applications, virtualization and mobility has to be looked at in conjunction with the underlying wired infrastructure in data centers and campus deployments," Mehra said in a statement when IDC released its numbers.

Analysts with the Dell'Oro Group said in August that the Layer 2/3 Ethernet switch market will grow to almost $25 billion by 2016, driven by switches aimed at large data centers. By 2015, 10GbE switches will make up the bulk of Ethernet switch sales, while revenue for 40GbE and 100GbE also will continue to climb.

The global enterprise router market didn't fare as well in the second quarter, according to Infonetics. Revenue in the space grew 2 percent in the second quarter from the first quarter, to $852 million, but fell 1 percent from the same period in 2011.

There was particular weakness in Europe and in the public sector segment of the market, analysts said. In addition, while router spending in North America was up 9 percent from the first quarter, revenue in China-which was a key growth region in 2011-is slowing, they said.