The worldwide Ethernet switch revenues grew 20.1% year over year in 2023 to $44.2 billion, according to the International Data Corporation (IDC) Worldwide Quarterly Ethernet Switch Tracker and the Worldwide Quarterly Router Tracker. In the fourth quarter of 2023 (4Q23) the Ethernet switch market grew 0.8%. The total worldwide enterprise and service provider (SP) router market recorded $16.4 billion in revenue in 2023, a year-over-year decline of 0.4%. The router market also saw a year-over-year decline of 12.7% in 4Q23.
"The worldwide Ethernet switch market was dynamic in 2023, driven by a variety of trends, in particular by the impact of AI," said Vijay Bhagavath, research vice president, Cloud and Datacenter Networks. "In the datacenter portion of the market, enterprises and service providers are building ever-faster Ethernet switch speeds to support rapidly maturing AI workloads. In the non-datacenter portion, Ethernet switch vendors are embedding AI capabilities in software management platforms to improve operations. Connectivity in general, and Ethernet switching in particular, are playing an increasingly critical role in supporting the era of AI everywhere."
Ethernet Swith highlights
- Datacenter Ethernet switch market revenues increased by 13.6% year over year in 2023 and by 4.4% in Q4 2023, representing 41.5% of the total market revenues.
- Revenues for 200/400 GbE switches in the datacenter segment surged by 68.9% throughout 2023 and by 14.8% from Q3 to Q4 2023.
- 100GbE switches, constituting 46.3% of the datacenter market's revenues, grew by 6.4% in 2023 but saw a sequential decline of 3.0% from Q3 to Q4 2023.
- ODM Direct sales in the datacenter segment increased by 16.2% year over year in 2023, accounting for 14.3% of the segment's annual revenues.
- The non-datacenter Ethernet switch market grew by 25.2% year over year in 2023, despite a 1.9% decrease in Q4 2023.
- The non-DC segment experienced growth due to improved component availability and the fulfillment of backlogged orders, although new product orders slowed in Q4 2023.
- Within the non-DC segment, 1GbE switches rose 24.2% in 2023 but fell by 7.0% in Q4, whereas 10GbE switches increased by 5.3% annually but dropped 6.1% in Q4 2023.
- Geographically, the U.S. Ethernet switch market grew 28.8% in 2023 and 3.8% in Q4 2023. Western Europe saw a 19.3% annual increase but a 6.9% decline in Q4. Central & Eastern Europe grew 20.7% annually but declined 1.6% in Q4. The market in the People's Republic of China decreased by 4.0% in 2023 but improved by 9.1% in Q4. The Asia/Pacific region (excluding Japan and China) grew 15.0% annually but declined 9.0% in Q4 2023.
Router Market Highlights
- The service provider segment, encompassing communications and cloud service providers, constituted 76.6% of the total router market, with a 1.4% revenue increase in 2023 but a 10.6% decrease in Q4 2023.
- The enterprise segment made up the remainder of the router market, experiencing a 6.1% decline in revenue for 2023 and an 18.6% decrease in Q4 2023.
- In the Americas, the combined service provider and enterprise router market saw a 2.0% increase in revenue for 2023 but an 18.0% decrease in Q4 2023.
- The Asia/Pacific region's router market experienced a 2.1% decline in revenue for 2023 and a 6.5% decrease in Q4 2023.
- In the Europe, Middle East & Africa (EMEA) region, the market saw a 1.7% decline in revenue for 2023 and a 13.6% decrease in Q4 2023.
Vendor Highlights
Cisco's Ethernet switch revenues increased 22.2% year over year in 2023 but declined 12.1% in 4Q23. Non-DC revenues made up 69.5% of Cisco's total Ethernet switch revenues in 2023 and rose 28.6% year over year for the full year but declined 12.8% in 4Q23. DC revenues made up the balance and rose 9.7% for the year but declined 10.6% in 4Q23. Cisco's total Ethernet switch share stood at 43.7% for the full year 2023. Cisco's combined service provider and enterprise router revenue rose 1.4% for the full year 2023, but declined 22.9% in 4Q23, giving the company a market share of 35.7% for 2023.
Arista Networks Ethernet switch revenues – 91.4% of which are in the DC segment – increased 35.2% in 2023 and rose 19.1% in 4Q23, giving the company 11.1% market share for full year 2023.
Huawei's total Ethernet switch revenue increased 10.6% in 2023 and 16.5% in 4Q23, giving the company market share of 9.4% for the full year 2023. The company's combined SP and enterprise router revenue rose 2.6% in 2023 and was up 0.9% in 4Q23, giving the company 29.2% market share for 2023.
HPE's Ethernet switch revenue – 89.6% of which are in the non-DC segment – increased 67.6% in 2023 and rose 50.8% in 4Q23, resulting in a market share of 9.4% for full year 2023.
H3C's Ethernet switch revenue declined 6.3% for the full year 2023, but rose 12.9% in 4Q23, giving the company full-year market share of 4.2%. In the combined service provider and enterprise routing market, H3C's revenues decreased 8.5% in 2023 and 9.8% in 4Q23, giving the company market share of 2.0% for 2023.
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