In this series of posts on market development and shares in 2017 I’ve been focusing on the regional bias of various IT product types. Today I want to look at the network market. Although Cisco continues to dominate the enterprise network market, Huawei leads overall. Perhaps it’s partially because of that and the relative immaturity of China and some other large countries that there has been a disproportionate growth in revenues from Asia Pacific over the last couple of years (see Figure).
Service Providers spend significantly more on networks than enterprises (see Figure) – something those of us thinking and writing most of the time about enterprise computing tend to forget. In fact the relative similarity of the networking hardware used by most telecommunications suppliers (the majority of the ‘Service Providers’) also makes that market more stochastic than the enterprise market. The Credit Crunch caused a significant downturn in sales in 2008-9 for both types of networking, but their trends have been very different in the years afterwards; spending on enterprise networks has remained virtually static each year, while there was a slump in spending by service providers in 2012 and 2013, before a slight increase in 2015-7.
Having been the pioneer of IP networking Cisco continues to enjoy this ‘first mover advantage’ in enterprise networks, while Service Providers are investing in new types of networking – new equipment of 5G and NFV for instance.
Market shares for the entire market, enterprise and service provider revenues are shown in the Figure. It demonstrates Cisco’s tremendous lead (a share of 54.6%), which hasn’t fallen since 2016 despite the strenuous efforts of Huawei, HPE, Nokia and the other leading players.
Huawei held the strongest market share in Service Provider network market (31.2%), which – combined with Cisco’s relatively weak position here (just 3.1%) and this markets much larger size – gave it leadership of the overall network market as well.
Networking is a vital component of both the IT and Communications industry; it provides the roads for our journey into the digital future. I don’t expect the market shares to change dramatically in the near future – especially as this is an industry firmly tied to hard-to-achieve Intellectual Property and innovation. The roll out of 5G wireless networks will prove more disruptive to wired networking than 4G, while there’s a lot of revenue to tie IoT devices and edge computing securely into the data center and consumer IT.