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A comprehensive overview of router and switch market: The changing dynamics of the manufacturing sector to play a crucial role in industry growth


Drastically changing production & distribution dynamics and the development of smart products has not only helped router and switch market reach new growth horizons, but has also assisted the industry to expand its customer base. Today, manufacturing is not just about producing goods, but is all about economies of scale, economics of demand & supply, product benchmarking, economies of scope, product personalization, customer engagement, and value chain. Technological innovations have narrowed the gap between the developed & developing economies and offering the industry players more opportunities to expand their business across the globe.
 

The advent of advanced digital technologies and the introduction of new online internet tools have upgraded the operational efficiency of network communications. In addition, they have also contributed toward the speeding up of day-today transactions, eventually resulting in lowered operational costs and reduced time consumption. As of now, agile manufacturing, distributed local-manufacturing, and loosely coupled manufacturing systems have gained large prominence across the business fraternity, which are expected to provide momentum and the much-needed impetus to the growth of router and switch industry. It will further generate lucrative opportunities for the new entrants to explore router and switch market for expanding their businesses.
 

Router & Switch Market
 

Dynamically changing dynamics across manufacturing sector can favorably leverage router and switch market growth. Four factors affecting the growth of router and switch industry include:
 

  • Customer Demand: Consumer purchasing parity has observed an incline in the last few years, owing to increased disposable incomes. Alongside, the demand for customized products has also increased, resulting in the rapid expansion of the niche businesses. A subsequent growth is expected in router and switch industry attributing to the aforementioned factors.
     
  • Economics of Production: Technological innovations have changed the face of the manufacturing sector. With the deployment of advanced technologies, production costs in manufacturing processes have significantly reduced, thereby enabling the production of cost-effective goods.
     
  • Nature of Products: Products equipped with modern technologies have completely transformed, and have earned the tag of ‘smart products’. It has been observed that the advent of the smart era has favorably leveraged router and switch market expansion.
     
  • Economics of value chain: New inventions in digital technologies have largely narrowed the gap between end-users and business players, thereby helping the industry participants to manufacture products that will be of high values to customers.
     

Router and Switch Industry Application Insights

Network switches find varied applications across small office/home office (SOHO) broadband, ethernet local area networks, fibre channels, ATM, RapidIO, and ITU-g.hn, and mid-to-large sized local area networks. Routers find extensive applications in data centers, enterprise backbones, layer 2 metro networks, and multiprotocol label switching (MPLS) Layer 3 virtual private network (VPN) service provider networks, and MPLS backbone. These devices are extensively used across myriad professional sectors; router and switch market, thus, encompasses the end-use arenas of personal banking, mobiles, and internet among others.
 

As per reliable estimates, global ethernet switch industry witnessed a valuation of over USD 5 billion in the first three months of 2017, with a CAGR of more than 3% on a year-on-year basis. However, global enterprise & service provider router market registered over USD 3 billion in the first quarter of 2017, at a diminishing y-o-y rate of more than 3.5%. The growth parameters of both the aforementioned markets are expected to majorly impact the development of router and switch industry, which, according to Global Market Insights, Inc., is projected to hit the revenue of USD 41.02 billion by 2022.
 

An Overview of the players operating in router and switch industry

According to authentically sourced statistics, Huawei, a global information & communications technology service provider, experienced excellent growth in both, the ethernet switch as well as enterprise & service provider router markets, in the first quarter of 2017.  Its revenue from the ethernet switch industry grew by more than 65% y-o-y in first quarter of 2017, while its revenue from the enterprise & service provider market grew by more than 16% in the first three months of 2017.
 

Arista Networks, a U.S. based computer networking firm, has also made commendable contributions to the router and switch market. Its revenue from the ethernet switch industry rose to more than 35% y-o-y, in the first quarter of 2017. Speaking along similar lines, while Hewlett Packard’s revenue from ethernet switch industry expanded by more than 0.5% in first three months of 2017, the revenue of Juniper Networks from the same industry grew by over 35% y-o-y in Q1 2017. The company also witnessed a revenue expansion of over 3% year-on-year from its enterprise & service provider router market in the first three months of 2017.
 

The aforementioned statistics provide sufficient evidence for the fact that the top-notch industry players have a significantly leading role to play in the expansion of router and switch market. The enormously escalating industry trends displayed by key participants are expected to generate a long-term impact on the future growth potential of router and switch market.
 

The present and future geographical trends of router and switch industry

North America is one of the most lucrative grounds for the development of router and switch industry and is expected to offer profitable growth avenues for business players, which will help them carve out a positive roadmap in the future. North America router and switch market share was worth USD 12.77 billion in 2014, pertaining primarily to the rising investments in the industry. With U.S. being the dominant region, this regional market is forecast to be valued for more than USD 15.87 billion by 2022, with a CAGR projection of more than 2% over 2015-2022.
 

High broadband & mobile data traffic across the U.S. and Canada have forced the communications service providers of these regions to make their networks more compliant and compatible with the swiftly changing core communications network technologies, aggregation, and mobile backhaul.
 

Router and switch market in China is slated to observe an escalating development over the years to come, with a heavy surge of high-definition video content, cloud applications, multiple-screen delivery, tablets, and smartphones. Escalating demand for data and video from residential and enterprise sectors is expected to further boost router and switch industry expansion across the region.
 

Key manufacturers of router and switch market have been actively adopting vital growth strategies such as mergers & acquisitions, product differentiation, technological inventions, and joint ventures to expand the geographical landscape and the product portfolio of the industry. With the deployment of faster networks, the range of mobile devices have also been increasing rapidly. This will subsequently lead mobile data traffic to heavily explode over the coming five years. The growing number of wireless devices and smart phones and the deployment of sophisticated networks such as 3G, 4G and LTE are anticipated to furnish enormous growth opportunities for the router and switch market players over the years ahead.
 

Global Market Insights, Inc. has a report titled “Router And Switch Market Size By Service (Ethernet Aggregation, BRAS, Ethernet Access, Internet Data Center/Hosting), By Product (Service Provider Core Router, Internet Exchange Router, Multiservice Edge Router, ATM Switch, Ethernet Service Edge Router) Industry Outlook Report, Regional Analysis, Application Potential, Price Trends, Competitive Market Share & Forecast, 2015 – 2022” available at https://www.gminsights.com/industry-analysis/router-and-switch-market-size