Cisco's Networking Share Slips As Huawei, Arista Gain Steam In $9B Worldwide Switch Router Market

Switch, Router Market In Q1 2017

Cisco's networking dominance slipped as competitors Arista Networks and Huawei gaimed share, according to first-quarter 2017 market data from IT research firm IDC. Worldwide revenue for Ethernet switches and routers hit $9 billion during the first quarter, according to IDC.

"The Ethernet switch market, across the enterprise and data center segments, is characterized by two competing forces: faster speeds and increased standardization," said Rohit Mehra, vice president, network infrastructure at IDC, in a statement. "Both forces drive port shipments up, but price erosion from standardization and product maturity means that improved price-performance becomes more important across regions."

Here is everything you need to know about the switch and router market for first-quarter 2017.

Cisco Switching Slipping

Cisco Q1 2017 Market Share: 55.1%

Cisco Q1 2016 Market Share: 59%

The San Jose, Calif.-based networking giant still owns more than half of the worldwide switching market, capturing $3.12 billion during the quarter. However, Cisco's market share dropped nearly 4 percent year over year to 55.1 percent in the first quarter. Cisco switch revenue for the quarter declined 3.5 percent compared with the same quarter one year ago.

During the company's recent third fiscal quarter, Cisco's switching sales rose 2 percent year over year to $3.49 billion. However, switching revenue dropped 5 percent during its second fiscal quarter. Looking ahead at fourth-quarter 2017, the networking giant expects overall revenue to be upward of 6 percent lower than previously anticipated, which caused its stock to fall more than 8 percent last month.

Huawei's Share Climbs

Huawei Q1 2017 Market Share: 6.3%

Huawei Q1 2016 Market Share: 3.9%

Huawei saw switching revenue grow 70 percent year over year to $359 million during first-quarter 2017. The Chinese networking and telecommunications vendor saw its market share climb 2.4 points to 6.3 percent compared with the same quarter one year ago.

During Cisco's third fiscal quarter earnings call in May, CEO Chuck Robbins said Huawei "is a very strong competitor."

HPE-Aruba

HPE Q1 2017 Market Share: 6%

HPE Q1 2016 Market Share: Unknown

Hewlett Packard Enterprise, which bought Aruba Networks for $3 billion in 2015, captured 6 percent of the switching market during the quarter. HPE, Palo Alto, Calif., generated $340 million in switching sales during first- quarter 2017. IDC did not include HPE market share for first quarter 2016 because H3C China numbers were included at that time, said IDC's Mehra in an email to CRN. Starting in second quarter 2016, HPE and H3C networking numbers were tracked separately, he said.

HPE-Aruba has been attacking Cisco's share through new networking products including the Aruba 8400 Core Switch Series. Aruba said its first core switch is aimed squarely at displacing Cisco's popular Catalyst line of switches.

Arista Networks Sales Up 37%

Arista Q1 2017 Market Share: 5.1%

Arista Q1 2016 Market Share: 3.9%

Fast-growing Arista Networks grew switching revenue 37 percent year over year to $291 million during the first quarter of 2017. Market share for the Santa Clara, Calif.-based data center networking specialist climbed to 5.1 percent of the market, up from 3.9 percent in first quarter 2016.

Arista's market share in the 100-Gb segment currently stands at nearly 28 percent.

Juniper Networks Grabs More Share

Juniper Q1 2017 Market Share: 4.3%

Juniper Q1 2016 Market Share: 3.2%

The Sunnyvale, Calif.-based networking vendor generated $241 million in switching sales during the quarter, up nearly 40 percent year over year. Juniper's market share increased 1.1 points to 4.3 percent compared with the same quarter one year ago.

The company recently hired networking sales veteran Marcus Jewell from Brocade Communications to drive Juniper's Europe, Middle East and Africa (EMEA) business.

$5.6B Switching Market In Q1

With Cisco, Huawei, HPE-Aruba, Arista and Juniper leading the way, the worldwide Ethernet switch market recorded $5.66 billion in revenue during the quarter, representing a 3.3 percent increase year over year.

Revenue for the 10-Gb switch market decreased 1.6 percent year over year, coming in at roughly $2 billion. However, 10-Gb switch port shipments grew 24 percent year over year with a total of over 10.7 million ports shipped in first quarter 2017.

Sales in the 40-Gb market declined 7.2 percent to $609.5 million in first-quarter 2017 year over year, while port shipments fell just below 1.3 million -- representing a decrease of 22 percent. Revenue in the 100-Gb market skyrocketed 323 percent while shipments were up 776 percent on an annualized basis.

Cisco Routing Slips

Cisco Q1 2017 Market Share: 43.9%

Cisco Q1 2016 Market Share: 48.8%

Although Cisco is still the dominant market leader in routing, the company saw its combined service provider (SP) and enterprise router revenue decrease more than 13 percent on an annualized basis. Cisco's router market share declined around 5 points year over year to 43.9 percent during the quarter.

Cisco reported a 10 percent drop in SP revenue for its recent third fiscal quarter compared with one year ago. For its fourth fiscal quarter 2016, Cisco's SP revenue dropped 5 percent year over year, followed by a 12 percent decline in its first fiscal quarter 2017, then a 1 percent decline in its second quarter.

Huawei Boosts Router Share

Huawei Q1 2017 Market Share: 19.8%

Huawei Q1 2016 Market Share: 16.3%

Huawei's enterprise and SP routing sales increase 17 percent year over year, capturing 19.8 percent of the market during the quarter. The network and telecom giant gained 3.5 percent more share during first-quarter 2017 compared with the same quarter one year ago.

Juniper Gains Share

Juniper Q1 2017 Market Share: 15.6%

Juniper Q1 2016 Market Share: 14.5%

Juniper's combined SP and enterprise routing revenue increased 3.4 percent year over year, enabling the networking vendor to grab 15.6 percent share during the quarter.

"Cloud and software-defined architectures are starting to shake up the status quo in the Ethernet switch and router markets," said Petr Jirovsky, research manager at IDC, in a statement.

Juniper recently enhanced its Software-Defined Secure Networks (SDSN) platform aimed at delivering security across multivendor environments as well as public and private clouds.

$3.3B Router Market In Q1

The worldwide enterprise and SP router market generated $3.35 billion in revenue during first-quarter 2017, representing a 3.7 percent decrease year over year. The decline was due in part to a 4.4 decrease in the large SP segment as well as a 1.4 decrease in enterprise routing sales.

Mehra said solution providers need to watch the router market closely as software-defined solutions start to take hold across the WAN market, with the potential for SD-WAN disruption in the traditional routing and WAN transport services markets.