Worldwide Ethernet Switch Market Delivered Robust Growth in 2023 While the Router Market Saw a Slight Decline, According to IDC

Worldwide Ethernet switch revenues grew 20.1% year over year in 2023 to $44.2 billion.
In 4Q23, the Ethernet switch market grew 0.8%.
The total worldwide enterprise and service provider router market recorded $16.4 billion in revenue in 2023, a 0.4% year-over-year decline. In 4Q23, the YOY decline was 12.7%.

Vijay Bhagavath, research vice president of cloud and center networks

The worldwide Ethernet switch revenues grew 20.1% year over year in 2023 to $44.2 billion. 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. These results were recently published in the International Data Corporation (IDC) Worldwide Quarterly Ethernet Switch Tracker and the Worldwide Quarterly Router Tracker.

Ethernet Switch Market Highlights

There were varying trends across the datacenter and non-datacenter portions of the Ethernet switch market. Revenues in the datacenter (DC) portion of the market rose 13.6% year over year in 2023 and were up 4.4% in 4Q23. Datacenter Ethernet switching made up 41.5% of the total market’s revenues, with the remaining in the non-datacenter portion.

Revenues for 200/400 GbE switches rose 68.9% for the full year in 2023 in the datacenter segment and grew 14.8% between the third (3Q23) and fourth quarters of 2023. 100GbE switches, which make up 46.3% of the datacenter segment's market revenues, rose 6.4% for the full year but declined 3.0% sequentially from 3Q23 to 4Q23. ODM (original device manufacturer) Direct sales continue to be an important part of the datacenter segment, rising 16.2% year over year in 2023 to make up 14.3% of the datacenter segment's revenues for the full year.

The non-datacenter (non-DC) segment of the Ethernet switch market grew 25.2% year over year in 2023, but declined 1.9% in 4Q23. With improved component availability, vendors are increasingly able to recognize revenues from fulfilling backlogged product orders, leading to high growth rates. In the fourth quarter, new product orders slowed as customers implemented heightened product inventory.

The non-DC segment, which includes lower-speed switches that are typically deployed in enterprise campus and branch locations, saw mixed results by speed. 1GbE, which made up 56.5% of the segment's revenues in 2023, rose 24.2% for the full year, but declined 7.0% year over year in 4Q23. 10GbE switches, which made up 20.4% of the non-DC segment's revenues in 4Q23, rose 5.3% for the full year, but declined 6.1% year over year in 4Q23.

From a geographic perspective, the total Ethernet switch market in the United States saw growth of 28.8% for the full year 2023 and 3.8% in 4Q23. In Western Europe, the market rose 19.3% for the full year, but declined 6.9% in 4Q23. In Central & Eastern Europe, the market grew 20.7% for the year and declined 1.6% in 4Q23. In the People's Republic of China, the market was down 4.0% for full year 2023, but was up 9.1% in 4Q23. Across the broader Asia/Pacific region (excluding Japan and China), markets grew 15.0% in 2023, but declined 9.0% 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 of cloud and center networks. "In the data center 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."

Router Market Highlights

The service provider segment of the router market, which includes both communications SPs and cloud SPs, made up 76.6% of total router market. Revenues for this segment rose 1.4% for the full year 2023 but declined 10.6% in 4Q23. Revenues in the enterprise segment accounted for the remaining share of the market and declined 6.1% for the full year 2023 and declined 18.6% in 4Q23.

From a regional perspective, the combined service provider and enterprise router market in the Americas rose 2.0% for the full year 2023 but declined 18.0% in 4Q23. In the Asia/Pacific region, the market fell 2.1% year over year in 2023 and was down 6.5% in 4Q23. In the Europe, Middle East & Africa (EMEA) region, the market declined 1.7% for the year and fell 13.6% in 4Q23.

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.

For more information or to read the full report, please visit www.idc.com.