India’s networking market grows 14.1% in Q2: IDC

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India’s networking market, which includes Ethernet Switch, Routers, and WLAN segments, witnessed a reasonable 14.1 per cent year-over-year (YoY) growth in terms of vendor revenues during 2021 Q2 (April – June), according to International Data Corporation (IDC).

The increased YoY growth could be attributed to the weak base last year caused by the first wave of the pandemic. However, Indian enterprises continued to invest in network infrastructure and the overall vendor revenues grew 5.6 per cent sequentially irrespective of the second wave of the pandemic.

Switching business in India had a strong 20.9 per cent YoY growth during 2021 Q2. The very high growth could be attributed to a very slow 2020 Q2. However, the non-DC switching business, which remained slow due to the shutdown of campuses grew by 38.5 per cent YoY, anticipating the hybrid work trend to be prevalent in the new normal. Key industries that contributed to the switching business include professional services, telecommunications, process manufacturing, and banking, the research firm added.

India’s router market expanded by 18.6 per cent YoY. Both the enterprise and service provider segments grew by 20.3 per cent and 18 per cent YoY, respectively. Service providers were investing in routing hardware, majorly around optimising capacities and building edge data centres, to enable enterprise use cases. Apart from telecom, other key verticals for routing include professional services, process manufacturing, and banking.

The WLAN segment declined marginally by 7.0 per cent YoY. Consumer gateway routers declined by 23.7 per cent after a massive spike in revenues for the last four quarters. The market was flooded with an excess supply of gateway routers which caused the eventual slowdown during 2021 Q2.

Enterprise-class wireless, however, sustained the recovery by growing 11.5 per cent YoY. Enterprises were investing in access points, anticipating the hybrid work scenario once offices open. Wi-Fi 6 is gradually becoming the de facto technology, thereby rapidly expanding the access layer to facilitate a variety of enterprise applications, IDC explained.

Ethernet Switch Market

According to IDC’s Worldwide Quarterly Ethernet Switch Tracker, the 2021 Q2 Ethernet Switch market in India stood at USD 147.5 million (by vendor revenue), registering a robust YoY growth of 20.9 per cent. The investments in 2021 Q2 leaned more towards non-DC switches with strong YoY growth of 38.5 per cent while DC switching grew by a marginal 2.2 per cent. The campus demand that was muted for the entire 2020 started to spend the pent-up demand ahead of opening offices in India. However, enterprises continued to suffer due to the ongoing chip shortages, thereby significantly delaying the lead times. Professional services, telecommunications, process manufacturing, and banking were the top verticals for 2021 Q2.

Cisco continued to dominate the Ethernet Switch market with a 58.6 per cent share during 2021 Q2, followed by Hewlett Packard Enterprise (HPE) and Juniper.

 Router Market

According to IDC’s Worldwide Quarterly Router Tracker, the India Router market in 2021 Q2 stood at USD 81.1 million (by vendor revenue) with a robust YoY growth of 18.6 per cent. The noticeably high growth was due to the weak base caused during the first wave of the pandemic. Both the enterprise and service provider investments in routing grew by 20.3 per cent and 18.0 per cent YoY, respectively. Telecom vendor investments were mostly centred on refreshes, bandwidth optimisation requirements, building edge clouds, investments ahead of 5G rollouts, etc. Apart from telecom, the key investment areas included professional services, process manufacturing, and banking.

Cisco leads the router market with a 68.2 per cent market share in 2021 Q2 followed by Nokia and Juniper.

 WLAN Market

According to IDC’s Worldwide Quarterly Wireless LAN Tracker, the Indian WLAN market had a marginal YoY decline of 7 per cent during 2021 Q2, majorly driven by the consumer wireless segment. The market stood at USD 50.3 million (by vendor revenue). The enterprise-class WLAN sustained the recovery made in 2021 Q1 and recorded a YoY growth of 11.5 per cent. Wi-Fi 6 contributed to 58.3 per cent of revenues in the overall enterprise WLAN market.

Cloud Managed wireless is also picking up growth, with enterprises opting for the ease of management and better scalability. The market for wireless as a service is also witnessing traction with vendors partnering with multiple telcos and ISPs to offer simplified solutions for small, medium, and large enterprises. Professional services, telecom, and process manufacturing were the top 3 verticals for enterprise wireless during 2021 Q2.

The consumer gateway router business declined sharply by 23.7per cent YoY owing to an adequate supply of gateway routers in the supply chain. The market for consumer gateway routers is expected to soften even further with Indian enterprises poised to open offices sooner than expected.

“The pandemic had a significant impact on Indian enterprises, especially in the small and medium business space. While enterprises clearly understand that network transformation is imperative to stay abreast in the current business landscape, they are not in an immediate position to incur huge capital expenditures. Connectivity as a service option will largely assist these organisations to navigate this challenge. The vendor landscape has been very actively positioning the ‘network as a service’ model to SMBs in partnerships with telcos and ISPs. This will enable enterprises to navigate the challenges around over provisioning of resources, filling the skill gap, and access to SLA-driven connectivity without incurring heavy one-time expenditures,” said Sudharsan Raghunathan, Senior Market Analyst, Enterprise Networking, IDC India.

According to IDC India’s forecast, the Ethernet Switch, Router, and WLAN markets are expected to grow in terms of compound annual growth rate (CAGR) for 2020–2025. Increased adoption of emerging technologies such as cloud, IoT, mobility, etc., would drive incremental revenues. IDC also expects large investments for 5G rollouts in the next couple of years.

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