data centerService provider router and switch revenue rose just 2% in 2013 to $14.5 billion as telecom providers grapple with a major technological shift, according to a new report from Infonetics Research. 4Q13 revenue from carrier router and switch sales dropped 4% year over year.

The advent of software-defined networking (SDN) is giving carriers cause for pause in network equipment spending, Infonetics’ co-founder and principal analyst for carrier networks Michael Howard elaborated.

“Major change is in the air as carriers of all sizes proceed cautiously with router and switch spending, in part because they are trialing SDN (software-defined networking) or just beginning to figure out how to proceed with SDN.

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“The fourth quarter is usually an indicator for the current year and sometimes a bellwether for the future. In the most recent quarter (4Q13), North America had a double-digit sequential decline in carrier router/switch revenue rather than the usual budget flush, with weakness coming mostly from Verizon and AT&T, among the global leaders of SDN activities.”

Among the highlights of Infonetics’ “Service Provider Routers and Switches,” report:

  • Prompted by the move to 100GE, the core router refresh is still mildly in motion: Core routers are up 3.3% for the full year 2013, but flat quarter-over-quarter (4Q13 from 3Q13)
  • There is intensifying focus on multiple content delivery networks (CDNs) and smart traffic management across routes, aimed at making routers and optical gear cooperate more closely
  • The top 4 manufacturers – Cisco, Huawei, Alcatel-Lucent, and Juniper – stayed in dominant positions in 2013, together taking 83% of global carrier router and switch revenue
  • Over the past 2 years, Huawei has increased its market share the most of any vendor
  • With SDN hesitation slowing router and CES spending, Infonetics now expects worldwide service provider router and switch revenue to grow at a low single-digit CAGR from 2013 to 2018, when it will reach $17.2 billion

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