IP router, switch revenues drop 10 percent, but Q4 outlook good

The global IP router and switching market may have suffered a near-term setback as revenues dropped 10 percent sequentially, but vendors are expected to see improvement in the upcoming fourth quarter, according to Infonetics Research.

Infonetics service provider router switch q3 2013Overall, the segment totaled $3.6 billion, up 7 percent year-over-year. Infonetics has forecast that the market will grow at a 7 percent compound annual growth rate (CAGR) from 2012 to 2017, when it will reach $20.2 billion.

Michael Howard, principal analyst for carrier networks and co-founder of Infonetics, said that the sequential dip in revenues was mainly due to seasonality and that the sector improved over Q2 2012.

"The third quarter is normally slow for the carrier router/switch market, so a 10 percent sequential drop isn't overwhelmingly bad, especially with the expectation of a good 4Q13 and an improving year-over-year outlook," he said. "All three main IP router/switch categories--edge routers, core routers, and carrier Ethernet switches (CES)--are up from a year ago."

While Huawei and ZTE both reported that their routing revenues in Asia Pacific declined during the quarter, Infonetics said it expects that they will both recover in Q4 2013. Likewise in Europe and EMEA, the segment did decline 10 percent, but the research firm expects that a number of the largest providers are "expected to carry out a decent budget flush in the 4th quarter."

From a vendor perspective, Cisco (Nasdaq: CSCO) continued to hold onto its first place lead with 38 percent market share followed by Alcatel-Lucent (NYSE: ALU) and Juniper Networks (NYSE: JNPR). One of the notable moves was Huawei, which dropped to the number 4 spot on Infonetics' Q3 2013 global router/Carrier Ethernet Switch revenue share Leaderboard.

All three of the top routing and switching vendors saw gains in the most recent quarter.

Cisco said in its fiscal Q1 2014 period that switching sales rose 3 percent to $3.75 billion as it saw an increase in the Americas and EMEA regions, while Alcatel-Lucent's IP routing division rose 7 percent year-over-year to $789.2 million. Due to successive record quarters of growth for its MX platform, Juniper reported that routing revenue was $609 million, up 5 percent sequentially.

For more:
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Related articles:
Juniper Networks to cut 280 jobs despite Q3 revenue rise of 6 percent to $1.2B
Alcatel-Lucent's Q3 IP revenues jump 7 percent to $789.2M
Cisco's switching sales grow to $3.75B, but net revenue drop, forecast raise concerns

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