The worldwide ethernet switch market experienced a decline of 9.1% year-over-year in the first quarter of 2011 (1Q11), while the worldwide router market performed better with 6.9% year-over-year growth in 1Q11 in spite of a seasonal sequential decline, according to the International Data Corporation (IDC) Worldwide Quarterly Enterprise Network Tracker. The results reflect a pause in the ethernet switching market after a strong recovery in the previous year, with the North American market leading the decline among the regions.
"The ethernet switch market was somewhat of a surprise to the downside in the first quarter following several quarters of better than 30% growth in 2010," said Rohit Mehra, director, Enterprise Communications Infrastructure at IDC. "While we expected growth to moderate going into 2011, the 9.1% year-over-year decline and also the 12.5% quarter-over-quarter decline turned out to be a dampener of sorts. Coming in at just above the $5 billion mark for 1Q11, this was a tough quarter for most of the major vendors, either sequentially or on a year-over-year basis. IDC believes that 1Q11 was a quarter with the market taking a pause after the strong growth from previous quarters. However, that growth will moderate significantly during the remainder of 2011."
The worldwide router market fared somewhat better in 1Q11 with a 6.9% year-over-year growth, although it did have a seasonal sequential decline of 11.9% quarter-over-quarter. The service provider segment, which accounted for 75.5% of the market in 1Q11, declined 12.6% quarter-over-quarter, while the enterprise segment had a larger sequential decline of 16.6%.
"Given the consolidation phase the broader ethernet switch market is in, there are signs that some segments are continuing to show at least some strength, and that is encouraging," said Cindy Borovick, vice president, Enterprise Communications Infrastructure and Datacenter Networks at IDC. "The Enterprise Networks Tracker shows that 10GbE switch revenue increased 15.9% year-over-year due to continued adoption in datacenters and campus core deployments. 10GbE port shipments increased at a faster pace reaching 1.35 million ports in the quarter, although per port prices declined by more than 20% compared to the previous quarter."
From a vendor perspective, Cisco's ethernet switch (Layer 2/3) market share in 1Q11 came in at 64.15% reflecting a slight decline, down from 65.7% in 4Q10. Cisco's market share is now at levels seen in 2009 when it averaged 64.4%. On a relative basis, Cisco continues to be strong in the 10GbE segment with a 73.8% market share in 1Q11.
"In the broader ethernet switching market, gigabit ethernet (GbE) decreased 12.8% year-over-year in spite of an 11.8% increase in port shipments," said Petr Jirovsky, senior research analyst in IDC's Enterprise Communications Infrastructure Group. "Gigabit ethernet now commands a 60.9% share of the overall Layer 2/3 switching market, while Fast Ethernet has an 11.4% share, clearly pointing to the steady, ongoing decline of Fast Ethernet. However, it still remains an attractive, cost-effective choice for many smaller businesses."