Infonetics: Carrier router, switch market remained flat at $14.6B over carrier hesitation on SDN

Service providers' continual hesitation about how to implement software-defined networking (SDN) into their networks continued to be a drag on the service provider router and switch market as 2014 total revenue remained flat at $14.6 billion.

Despite the near-term slowdown, the market will continue to rise over the next four years to $17 billion, according to Michael Howard, senior research director for carrier networks at Infonetics Research.

"We've been talking about this for the past year and it's still true: the enormity of the coming SDN-NFV transformation is making carriers more cautious with their spending," said Howard in a release. "But this does not mean that router and switch spending will take a sizeable downturn. Rather, we look for the market to slowly climb to $17 billion in 2019, a five-year compound annual growth rate (CAGR) of just over 3 percent--unchanged from our previous forecasts."

Overall, worldwide service provider router and switch revenue was $3.8 billion in the fourth quarter of 2014, up 2 percent on a quarter-over-quarter and year-over-year basis. However, core router sales dropped 5 percent in 2014 from 2013 due to what the research firm said was the volume of capacity already "in the ground."

From a regional perspective, North American service providers remained cautious on router/switch spending in 2014, driving down revenue 7 percent year-over-year. Alternatively, the other major geographical regions--EMEA, Asia Pacific and Latin America--grew in 2014. In particular, China was a star performer in what was a flat 2014 Asian telecom economy with year-over-year double-digit growth.

During 2014 and the fourth quarter of 2014, the top four router and Carrier Ethernet Switching (CES) manufacturers--Alcatel-Lucent (NYSE: ALU), Cisco, Huawei and Juniper--remained in their dominant positions, together taking 85 percent of revenue.

For more:
- see the release

Related articles:
Carrier router, switch spending slowed in Q1 due to 'SDN hesitation,' says Infonetics
Juniper's Q4 revenues drop 14% on slow carrier spending but beat analyst expectations
Alcatel-Lucent's 2015 turnaround may become a reality
Cisco's Chambers expects service provider capex to decline in 2015

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