North America was a bright spot in an otherwise flat year in the router and aggregation switch market, according to the Dell’Oro Group. North America bucked the worldwide trend with double digit revenue growth driven by demand for 400 Gbps equipment in the telecom and cloud service provider sectors.
The worldwide router market was flat year-over-year but revenues were “in line with average revenues of the past five years,” the group said.
“We see the flat 2Q22 Y/Y global market performance as a positive signal, as market conditions remained difficult in the second quarter,” Dell’Oro Senior Analyst Ivaylo Peev said in a press release about the lack of router market growth. “Economic uncertainty, rising inflation, China’s zero-COVID-19 policy, and the war in Ukraine are depressing markets in 2022. Adverse foreign exchange rates and the comparison to a strong 1Q 2021 are adding to the factors negatively impacting the performance of the SP Router and Aggregation Switch market.”
Other highlights from the Dell’Oro Group’s second quarter report:
- Moderate growth in the Caribbean and Latin America (CALA) regions was offset by steeply decreasing revenues in Europe, the Middle East and Africa (EMEA) and a market decline in the Asia Pacific (APAC) and China.
- Positive growth in the Service Provider (SP) Core Router and the Aggregation Switch segments was offset by negative performance in the SP Edge Router segment.
- The enterprise high-end router segment experienced double-digit growth across all regions except APAC. APAC’s total growth was limited due to a decline in China.
- Adverse foreign exchange rates driven by a strengthened U.S. dollar suppressed market results in large parts of the EMEA and APAC regions, as business transactions were negatively impacted by the conversion between local currencies and the USD.
Examples of how router market growth in North America is being driven by demand for 400 Gbps connectivity:
- Last month, Verizon said that it was upgrading its core fiber network to 400 Gbps per port optical technology. The carrier cited its 5G Ultra Wideband network traffic as a driver of the move. ·
- In May, Zayo said that it was upgrading its long haul, dark fiber, 400G network and subsea routes worldwide. The new 400G routes involved major locations: Dallas, Atlanta, Chicago, New York City, Denver, Salt Lake City, Los Aneles, Phoenix and the San Francisco Bay area.