Despite shortages, networking hardware market grew strongly in 2021
Any port in a storm
Analyst firm International Data Corporation (IDC) has found that the global market for switches surged during 2021, despite shortages that have seen delivery of some products delayed for many months.
Worldwide ethernet switch revenues grew at 11.8 percent year-on-year to US$8.5B in Q4 2021 while router market revenues grew at seven percent year-on-year to US$4.6B. From an annual perspective, the Ethernet switch market experienced a 9.7 percent increase to deliver sales of US$30.7B for 2021 and the router market experienced a 6.5 percent increase to US$15.9B.
Overall switch port shipments increased 13.0 per cent in 4Q21 and rose 16.2 per cent on an annualized basis in 2021, suggesting increased revenue correlated to more devices and capacity shipping rather than vendors getting away with price hikes during shortages.
The greatest percentage increase for the ethernet switch market in Q4 was in Asia Pacific, excluding Japan and China, and the second largest increase was in China, at 24.9 and 21.1 percent year-on-year, respectively.
While most markets grew, Japan and the Middle East and Africa had a decline of 14.3 and 9.9 percent year-on-year for Q4.
In a statement, IDC vice president Brad Casemore attributed growth in the Ethernet market to orgs prioritizing connectivity “as a critical component of their digital infrastructure strategies.”
However, Casemore noted that component shortages impacting supply chains alongside geopolitical conflict-induced economic uncertainty would mean 2022 presents ongoing challenges.
“These headwinds will be counterbalanced by the continued buildout of high-speed datacenter network capacity at hyperscalers and other major cloud providers in the quarters ahead," said Casemore.
This increase in high-speed kit is already visible. Thanks to those hyperscalers and cloud providers, 200/400 GbE switches grew 40.4 per cent quarter on quarter in Q4.
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For routers, communications and cloud services providers accounted for the bulk of revenue - a whopping 77.4 percent, equating to an over 10 percent increase annually. Comparatively, the enterprise segment declined 2.6 percent year-on-year in Q4, but still managed a two percent increase in revenue for the year.
Asia Pacific (excluding Japan and China) again led growth with a 19.4 per cent year-on- result. Japan declined (11.1 per cent) in Q4 and year-on-year. But the US had the biggest annualized increase at 22.9 per cent, with service provider revenues (37.8 per cent) offsetting enterprise segment decline of 18.5 percent.
Cisco and Huawei ranked first and second place respectively with both ethernet switch and router market share. Cisco took 45.3 percent of the ethernet market, while Huawei took 10.2 percent. Cisco boasted 34.6 percent of the router market, while Huawei had 30.5 percent.
Arista networks saw a 27.7 percent full year switch ethernet switch revenue rise that brought it up to third place with 7.6 percent market share.
But despite all the growth and success, network equipment lead times are expected to remain painfully long well into next year, before beginning to show slow incremental improvements.
This indicates that while some reshuffling of both kit consumed and location of geographical demand exists, the world is likely to happily absorb whatever supplies can be provided. ®