There is a growing disparity in the market for Ethernet routers and switches.
Sales of Layer2/3 Ethernet switches have gone up nearly every quarter for the past two years, according to market research firm IDC’s Quarterly Enterprise Networks Tracker.
Except for the third quarter of 2012 (down 4.4 percent) and second quarter of 2011 (down 1.6 percent), sales of Ethernet switches have risen every quarter compared to the previous year, sometimes by as much as 7.4 percent, sometimes by as little as half a percent.
Sales of routers, on the other hand, have been down four of the last eight quarters, once by as much as 7.9 percent in the first quarter of this year. When sales have increased year over year, the percentages have been low—2.8 percent in 1Q 2012, .6 percent in 2Q 2012. The biggest change in the pace of router sales was the first quarter of this year, when sales dropped 7.9 percent compared to the first quarter of 2012. Sales of Ethernet switches grew 2.1 percent during the same quarter, compared to the same quarter a year ago.
Part of the reason is a shift that puts more devices and activity at the edge of the enterprise network rather than at the core. At the edge, virtual applications and servers, video traffic and “a growing and diverse set of wired and wireless devices” continue to increase demand for Ethernet switches, according to Petr Jirovský, senior research analyst in IDC’s Networking Trackers Group.
Another part is the increasing shift within enterprise networks from Gigabit Ethernet—the standard at most companies for connections all the way down to the workgroup level—and toward 10gigabit Ethernet and 40-gigabit Ethernet, according to Rohit Mehra, vice president, Network Infrastructure at IDC: “While GbE is still expected to hold its own for the foreseeable future, we expect 10GbE and 40GbE to drive the wired infrastructure market forward in the coming years, both in the datacenter as well as campus core deployments.”
The one thing that doesn’t change in the market for Ethernet switches and routers is the dominance of Cisco Systems, whose market share dropped a bit, to 62.7% of the overall market for switches during 1Q 2013. (Its share of the 10GbE market was 66.7 percent.)