Market Insight

REPORT HIGHLIGHTS - IP Edge Router Spending Declines for First Time since Telecom Crash of 2001

March 11, 2016

Michael Howard Michael Howard Senior Research Director, Carrier Networks

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The global market for service provider routers and switches totaled $14.4 billion in 2015, a 1 percent decline from the prior year, according to the Service Provider Routers and Switches Market Tracker from IHS Inc. (NYSE: IHS).

“2015 is the first year since the telecom crash of 2001 that IP edge router spending declined, other than the financial crisis that caused a dip in 2009. We believe carriers’ in‑motion trend to move service functions off physical edge routers is at work here. They’re being careful with spending while getting ready to deploy these services on commercial servers using network functions virtualization (NFV) technology,” said Michael Howard, senior research director and advisor for carrier networks at IHS.   

“As a result, we’ve flattened the five-year 2015 to 2020 compound annual growth rate (CAGR) for carrier routers and switches to 0.3 percent,” Howard said.

ROUTER AND SWITCH MARKET HIGHLIGHTS

  • In the fourth quarter of 2015 (4Q15), service provider router and switch revenue was sequentially up 8 percent, to $3.7 billion
  • Core router upgrades and replacements prompted by the move to 100GE continued to push a nice year-over-year uptick in 4Q15
  • However, all 3 categories — edge and core routers and carrier Ethernet switches (CESs) — were up sequentially, in spite of which translated to the 1 percent decrease in the overall market for the full-year 2015
  • Asia Pacific was the big drag on 2015 carrier router and switch sales due to sizable spending drops in China and Japan
  • The “mal-Asian” malaise would have been worse, except for a nice jump in the rest of Asia, led by Australia, Korea, Singapore and the Philippines
  • The top 4 manufacturers — Alcatel-Lucent, Cisco, Huawei and Juniper — stayed in dominant positions in 2015

ROUTING AND SWITCHING REPORT SYNOPSIS

The quarterly carrier routers & switches report tracks the foundational network equipment—IP edge and core routers, vRouters and carrier Ethernet switches (CESs)—that enables voice, video and data communications. The research service provides worldwide, regional, China and Japan market share, market size, forecasts through 2020, analysis and trends. Vendors tracked include Alaxala, Alcatel-Lucent, Brocade, Ciena, Cisco, Coriant, Ericsson, Fujitsu, Hitachi Metals, Huawei, Juniper, NEC, UTStarcom, ZTE, others.

Geography
Global
Organization
Cisco Ericsson Huawei NEC
Research by Market
Enterprise & IT Mobile & Telecom
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