Ethernet switch market strong in Q2

Data center drives growth as prices drop, but campus and regional specialization factor in too

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The Layer 2-3 Ethernet switch market exceeded $5.6 billion in the second quarter 0f 2014, with nearly all vendors showing strong sequential gains, according to Dell’Oro Group.

The data center remains the strongest segment for growth, though enterprise campus and regional markets such as North America were also robust for select vendors.

A record number of vendors exceeded $100 million in revenue in the quarter, including Arista Networks, Cisco, Dell, Extreme Networks, HP, Huawei and Juniper. Huawei became the No. 3 vendor in the overall switch market – displacing Juniper -- while Arista retained the No. 3 spot in data center switching.

According to Crehan Research, steep price declines helped propel the Ethernet data center switch market to new shipment highs in Q2. Shipments of 10, 40 and 100G Ethernet switch ports increased by 1 million in Q2 compared to Q1.

Crehan expects this trend to continue, especially with the emergence of Intel’s “Grantley” server, which the firm believe will ignite 10G as a more popular server connectivity option.

Meanwhile, the market for enterprise routers in Q2 disappointed, as discount pressure, preferences for local and lower-cost vendors in China, and lower public sector sales drove down revenue, according to Infonetics Research. Demand remains high though, as unit shipments rose.

Worldwide enterprise router revenue totaled $867 million in Q2, up just 1% from Q1 in a quarter that typically sees a strong seasonal pickup, Infonetics found. Sales fell 9% from a year ago though, while unit shipments increased 6%.

High-end and mid-range router unit shipments were up by double digits year-over-year, while branch office and low-end routers posted more muted growth, the firm found.

Asia Pacific is once again the top-performing region for enterprise routers in the quarter, while North American sales dropped 19% and EMEA fell 11% from last year. U.S. vendor performance was mostly down, while Chinese vendors gained as preferences in China shift to local vendors Huawei and ZTE, as well as the H3C division of HP.

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