The global router and switch market size is expected to exceed USD 41 billion by 2022. The industry is poised for a quantum shift owing to increased usage of high-speed Gigabit Ethernet, driven by rising adoption of PoE for varied applications and convergence of business and residential networks. Increasing demand for internet-enabled devices, expansion of cloud networking combined with rising adoption of virtualized technology are expected to drive growth. Further, the proliferation of Wi-Fi technology and growing demand for enterprise WLAN equipment is projected to elevate demand.
Mobile data traffic is projected to explode over the next six years as operators deploy faster networks and consumers add more devices to the mobile networks. This surge in demand can be attributed to increase in smartphone usage, rise in wireless devices in network combined with the deployment of faster networks such as 3G/4G and LTE across the globe.
Growing anticipation towards a considerable shift in demand from hardware networking solutions to software-based solutions is expected to pose a challenge to the traditional hardware-based players. Increasing usage of cloud computing solutions is further driving the industry trend. This transition is designed to offer flexible and application-driven customization of network infrastructure.
Surging demand for intensive R&D has led to the development of sophisticated high-end products, which are delivered for ease-of-use and to provide control to meet process requirements. This has considerably widened the scope of advanced bandwidth IP routing services which is expected to fuel the router and switch industry over the next six years.
U.S. router and switch market by product, 2012 – 2022 (USD Million)
Key products include Internet exchange, multiservice edge, Ethernet service edge, and service provider core routers, and ATM switch. As carriers become increasingly reliant on Ethernet to transport IP traffic in their networks, demand for these products is expected to increase over the forecast period.
Multiservice edge products is designed and optimized for delivering carrier-class services including interactive, data, voice, and video content delivery. It simplifies and consolidates the edge of service provider network by converging BRAS, Ethernet aggregation along with IP/MPLS Provider Edge (PE) functionalities on a single compact platform. Multiservice edge devices support a significant range of exterior and interior gateway-routing protocols combined with high-performance multicast routing. It is suitable for deployment in service-routing, edge aggregation, and peering applications requiring high-performance IP routing.
Increasing shift of enterprises demanding cost-effective and faster metro network services for connecting branch offices, data centers, and workers is expected to drive ethernet access services demand.
Growing space of e-retailers is projected to offer lucrative opportunities for enterprise infrastructure growth. Wi-Fi hotspots, broadband highways, Wi-Fi-enabled stations along with tech-savvy campuses are expected to positively elevate the router and switch market.
The industry mainly includes BRAS, Ethernet aggregation, Ethernet access, and Internet data center/collocation/hosting services. Rising subscriber demand for high-speed services such as video-on-demand, multiplayer gaming, digital audio, and other applications require the delivery of enhanced IP services offered by broadband access aggregation.
Ethernet access services enable a large global or regional virtual footprint with a deterministic and consistent service for its end-user customers. It minimizes cost and time-to-USD Million for carrier Ethernet providers for reaching end-user locations. It ensures a consistent expectation and delivery of service.
Internet data center/collocation/hosting is used to house computer systems along with associated components such as storage and telecommunication systems. It includes redundant data communication, environmental controls, back-up power supplies, and various security devices. A collocation center is a type of data center service where bandwidth, space, and equipment are available on rent for retail customers.
The collocation center offers higher bandwidth and low network latency at an economical cost. The major collocation center customers include the web, e-commerce, and telecommunication companies along with major enterprises using the facility for offsite data backup and disaster avoidance.
North America router and switch market accounted for over 35% share in 2014. Mobile backhaul investments have grown substantially in the U.S. as service providers purchase products for meeting the increased demand for data through varied LTE-enabled devices.
Rising fixed broadband traffic along with rising mobile data traffic is propelling service providers for upgrading their core networks, mobile backhaul, aggregation and access in the North American regions of Canada and the U.S.
China router and switch market is poised for massive growth of video and data for enterprise and residential customers owing to rising demand for multi-screen delivery, on-demand viewing, high-definition content, rising usage of tablets and smartphones along with increasing adoption of cloud applications.
Overall weakness in Europe along with softness in the public sector vertical is acting as a restraint for growth. Substitution with lower-end devices is estimated to hamper European industry growth.
Competitive Market Share Insights
Key companies dominating router and switch market share include Cisco, Alcatel-Lucent, Huawei Technologies, Juniper Networks, and ZTE Corporation. Companies have focused on launching their cloud-based solutions for establishing a strong presence. For example, Cisco launched its WAN optimization and cloud-based routing platform for the enterprise known as Cisco Cloud Connected Solutions to address the changing industry trend. This shift will absolve customer’s responsibility to integrate various systems and enable more secured service delivery.
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