Before it disappeared into Oracle, Sun's motto was "The network is the computer." They didn't know the half of it. According to IDC's latest worldwide router market report, the worldwide Ethernet switch market reached record revenues of $5.9 billion in the third quarter of 2011. In particular, the 3Q11 results showed exceptional Ethernet switch market performance in the Asia/Pacific region, which increased 27.8% year over year and now accounts for 25.8% of worldwide revenue. Can you say explosive growth? I knew you could.
We're used to think of North America and Europe as being the center of the Internet, but in a statement, Rohit Mehra, IDC's director of Enterprise Communications Infrastructure said, "After a weaker than expected first half of 2011, the Ethernet switch market rebounded strongly this quarter largely on the basis of healthy demand in the Asia/Pacific region. China experienced remarkable 44.1% year-over-year growth this quarter, but other countries in the region also showed exceptional growth. Australia, Korea, and India, for example, all ended the quarter with 27-30% annual gains, further reaffirming the continued relevance of network infrastructure within enterprise IT."
In particular, 10Gibabit Ethernet (10GbE) growth has exploded. Since its standardization in 2002 10GbE has been becoming the high-speed interconnect of choice for Internet backbones and metropolitan and wide area networks (MANs and WANs). IDG's numbers show this with 10GbE switch revenue having increased 29.9% year over year and 99.0% in port shipments due to continued adoption in datacenters and campus core deployments. 10GbE port shipments grew to a record 2.09 million ports in the quarter.
The vendor winner of this race for Internet speed? It won't surprise anyone to find out that it's Cisco. IDC's analysis shows "Cisco's Ethernet switch (Layer 2/3) market share in 3Q11, which includes the strong month of July, the last month of Cisco's fiscal year, came in at 66.5% reflecting a significant rebound from the 63.8% in 2Q11. Cisco's market share is now at the highest level we have seen over the last year. On a relative basis, Cisco continues to be strong in the 10GbE segment where it holds more than 73% of the market in 3Q11."
Cisco has only done better since IDC's report period closed. In its latest quarter, Cisco showed revenue growth in a quarter that was supposed to be down thanks to U.S. enterprise customers (up 15 percent), U.S. commercial customers (up 20 percent), and even some government growth.
"In the broader Ethernet switching market, Gigabit Ethernet revenue increased 2.7% year over year and port shipments experienced strong growth of 27.1% as the transition from Fast Ethernet to Gigabit Ethernet continues," said Petr Jirovský, senior research analyst in IDC's Networking Trackers Group in a statement. "Gigabit Ethernet now commands a 61.6% share of the overall Ethernet switching market revenue and 46.9% of port shipments."
I've seen the switchover to Gigabit Ethernet myself. Only the smallest and most cash conscious of offices are still using 100Mbps (Megabit per second) Fast Ethernet for critical business networking.
Routers, on the other hand, didn't do so well. IDC reported, "The worldwide Router market, after several quarters of high single- and low double-digit growth, increased just 2.8% year over year in 3Q11 as the 9.4% year-over-year increase in Asia/Pacific was offset by less than 0.5% growth in both Americas and Europe, Middle East and Africa (EMEA). Among the major countries, the out-performers included China, which increased 12.9% year over year, Japan up 10.9% year over year, Australia with 13.2% year-over-year growth, and Germany with a gain of 8.4% year over year.
That was the good news. The bad news is that the financial woes of Italy, Portugal, Spain, and Greece all saw double-digit declines. The service provider segment of the router market, which accounted for 73.9% in 3Q11, grew 5.0% year over year, while the enterprise segment actually declined 2.8% on an annual basis."