Cisco Tops an Evolving Ethernet Switch Market: IDC

Trends such as video, BYOD and mobility are key drivers in the changing data center networking infrastructure, according to IDC analysts.

Cisco Systems continues to dominate a worldwide Ethernet switch market that saw revenue hit $5.7 billion in the fourth quarter of 2012, a slight decline from the same period a year earlier but a healthy jump from the third quarter.

Ethernet switch sales fell 0.5 percent in the fourth quarter from the same period in 2011, though they jumped 7 percent from the third quarter of 2012, according to IDC analysts. In addition, the same pattern played out for the global router space, the analysts said in a March 1 report. During the fourth quarter of 2012, router sales fell 0.2 percent compared with the same period a year earlier, but grew 5.6 percent over the third quarter.

In parsing the Ethernet switch sales, Rohit Mehra, vice president of network infrastructure at IDC, said that particular trends in the data center were driving the growth of 10 Gigabit Ethernet and 40GbE.

"While growth in the Ethernet switch market will largely come from 10GbE and 40GbE in the coming years, it is encouraging to note that the market for Gigabit Ethernet is holding its own, largely in campus, aggregation and network edge deployments," Mehra said in a statement. "While enterprise mobility is no doubt the focus for IT and network managers, the underlying wired infrastructure is also continuing to get mindshare in the context of a holistic approach to the network in delivering applications to end-users."

Revenue for 10GbE Ethernet switches—Layer 2-3—jumped 14.9 percent over the same period in 2011, for the first time exceeding the $2 billion mark, IDC said. At the same time, 10GbE port shipments jumped 43.9 percent—almost reaching 4 million ports. Overall, 10GbE remains the key driver of the overall Ethernet switch space, according to the analysts.

In the Layer 4-7 switching area, revenue jumped 9.1 percent, to $421 million for the fourth quarter. For the entire year, revenue in the Layer 4-7 space increased 12.5 percent.

According to IDC, Cisco continued to retain its dominant lead in the Ethernet switch space, with a market share of 61.2 percent, though it was a slight drop from the 64 percent share it held in the fourth quarter of 2011. Meanwhile, Hewlett-Packard saw its second-place market share grow to about 8.5 percent. Alcatel-Lucent, Huawei Technologies and Juniper Networks rounded out the top five, according to IDC's numbers.

HP most recently made a move in the space with the unveiling of the SX1018 Ethernet switch, part of a larger data center announcement that included new BladeSystem enclosure, server and storage offerings.

"After a lackluster performance in the third quarter in both the switch and router markets, sequential growth returned to the enterprise network infrastructure market in 4Q12, and even the marginal year-over-year growth was creditworthy, given the stronger performance of the market in the fourth quarter of last year," Petr Jirovsky, senior research analyst in IDC's Networking Trackers Group, said in a statement. "That said, overall market drivers, such as proliferation of video traffic on the network, and the need to support a growing and diverse set of wired and wireless devices at the network edge will continue to keep the enterprise networking market relevant over the longer term."

IDC's findings dovetailed with numbers analyst firm Dell'Oro Group released Feb. 11 that indicated that revenue in the Layer 2-3 Ethernet switch market will hit almost $25 billion in 2017, thanks in large part by large data center deployments and the need for faster speeds in campus networks. Various trends in the data center are dictating continuing changes in networks, according to Dell'Oro Vice President Alan Weckel.

"Technology transitions are changing the way IT managers look at their network topologies," Weckel said in a statement. "Bring your own device (BYOD) and the unprecedented growth in the number of personal devices accessing business networks is driving this change. Today, most enterprises look at the purchase of Ethernet switching and wireless LAN (WLAN) as separate decisions and for different applications. Ethernet switching is typically deployed for user access and WLAN for user mobility in the enterprise."

However, over the next few years, Dell'Oro analysts "expect enterprises to focus primarily on user access, regardless of the underlying technology, with a small but growing number of enterprises using WLAN as the main connectivity option for a user. This will likely lead to a tighter coupling of WLAN and Ethernet switch technologies during the forecast period," he said.