Network markets grow 10% in Q1 2018

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Network hardware revenues are a big component of the IT market, accounting for $44b in Q1 and $174b in the year to the end of March. ‘Unit’ shipments are harder to estimate than in many other areas; for the record I believe there were 2.9m network devices sold in Q1 and 11.7m in the year. Network port shipments were 373m and 1.5b respectively. The Figure shows a forecast for the market is split between products used by telecoms companies (Service Provider) and those by businesses (Enterprise). For the record I also include consumer networks made by Netgear, Cisco and others in ‘Enterprise’.

The two most important network suppliers are Huawei in the service provider and Cisco in the enterprise areas (see my Figure). While they both play in each market, Huawei is more successful overall, achieving a 25.0% share in the year to the end of March as opposed to Cisco’s 18.1%. Cisco has held the top spot in enterprise networks since the beginning and still pursues an upscale partnership strategy (with IBM, NetApp and others) and has not gone through major restructuring, unlike most of the other large enterprise hardware vendors. Huawei is almost entirely absent from the US market (it had a market share of 0.5% for the year). Nokia has consolidated its third position globally through the acquisition of Alcatel Lucent, while it is second only to Huawei in EMEA in the overall market. In the distant past many of the tecomms companies used were publicly owned and wanted – or were required to use – national IT suppliers; which partially explains why there are still major regional differences in who the leading suppliers are. The current social and economic trends towards ‘new nationalism’ may slow down the growth in Cisco and Huawei’s market shares in future, although it is highly unlikely we’ll see a trend towards country-level suppliers.