Negative Impact Of COVID-19 Prolongs In The Enterprise Networking Market, Resulting In 16.4% YoY Decline During 3Q20: IDC India

By Ron Chen, Correspondent ASEAN Region

India’s networking market which includes Ethernet Switch, Routers, and WLAN segments witnessed a 16.4 per cent year-over-year (YoY) decline in 3Q20 (Jul-Sep 2020).

The decline during 3Q20 was majorly characterized by the decline in router revenues. The routing business in India declined by 40.2 per cent YoY in 3Q20. The WLAN market in India grew marginally by 3.1 per cent YoY. Demand for consumer grade gateway routers saw a rapid increase driven by remote working and online schooling. However, the enterprise class WLAN (access points and controllers) segment declined significantly due to lesser demand for campus infrastructure.

Market for Wi-Fi 6 witnessed significant traction in the Indian market. While the revenue contribution of Wi-Fi 6 differed by vendors, there was a significant jump in the sales of Wi-Fi 6 access points across all the major vendors in the segment.

Switching had a YoY decline of 8.8 per cent in 3Q20. Much like the routing segment, the decline in the ethernet switch segment was attributed to the decline in investments from service providers. While the switch market declined YoY by 8.8 per cent, from a sequential standpoint, the switch market expanded by 12.6 per cent, which shows that the market is recovering from the COVID-19 impact. Key segments like professional services and banking continued to spend. However, investments from other verticals continued to be slow.

India Ethernet Switch Market 3Q20

According to IDC’s Worldwide Quarterly Ethernet Switch Tracker, the 3Q20 Ethernet Switch market in India stood at US$136 million (by vendor revenue) registering a YoY decline of 8.8 per cent. Both DC and Non-DC segments posted a YoY decline. Professional services and Banking were some of the key business verticals. Banking played a very important role in providing continuous investments during the COVID-19 period. The consolidation exercise within the banking sector had greatly boosted the revenues of ethernet switching segments. Investments from manufacturing also showed some signs of recovery in terms of specific segments such as hi-tech, automotive, and pharma manufacturing. Government buying continued to be slow specifically in the state government segment. IDC expects the market to fully recover by 1H 2021 subject to the pandemic’s prognosis in the country.

Cisco continued to dominate the Ethernet Switch market with a 59.8 per cent share during 3Q20, followed by Huawei and Hewlett Packard Enterprise (HPE).

India Router Market 3Q20

According to IDC’s Worldwide Quarterly Router Tracker, the India Router market in 3Q20 stood at US$ 57.7 million (by vendor revenue) with a YoY decline of 40.2 per cent due to the decline in investments from the service provider segment. Banking contributed to the majority of the business in the enterprise segment with SD-WAN adoption being one of the key growth drivers. Spending from segments like government and manufacturing remained stagnant. Recovery for the routing segment is expected to happen in the first half of 2021.

Cisco leads the router market with a 64.4 per cent market share in 3Q20 followed by Juniper and Nokia.

India WLAN Market 3Q20

According to IDC’s Worldwide Quarterly Wireless LAN Tracker, the Indian WLAN market had a YoY growth of 3.1 per cent during 3Q20. The market stood at US$60.9 million (by Vendor Revenue) majorly contributed by consumer gateway routers. While enterprise class WLAN took a significant decline of 25.7 per cent YoY, the consumer gateway router demand picked rapidly by 36.7 per cent YoY to support the growing demand of employees and students working out of their homes.

Lower demand for campus infrastructure caused a steep decline in the enterprise WLAN segment (access points and controllers). Despite the lower demand in the enterprise WLAN segment, Wi-Fi 6 is picking up traction in India with a significant jump in revenues over the last few quarters.

Public hotspot initiative projects, such as PM WANI is expected to boost the growth of wireless infrastructure business in the country thereby enabling an effective last mile to fuel growth in the tier-2 and tier-3 cities of India.

With a market share of 29.8 per cent, TP-Link was the market leader position in the WLAN segment during 3Q20, followed by D-Link due to the rapid increase in demand for consumer gateway routers. The enterprise class WLAN segment was led by Cisco followed by Hewlett Packard Enterprise.

Senior Market Analyst, Enterprise Networking, IDC India Sudharsan Raghunathan says, “COVID-19 has accelerated the enterprise movement towards cloud which has become the origin of transformation in the networking ecosystem. Many of the networking investments have been around technologies that enable seamless working from anywhere, enhancing the security framework, extending the corporate network efficiently, easier manageability & troubleshooting, and bringing back employees into the office premises safely. The focus for software-driven has been more than ever, the market is also at the point where networking and security cannot be perceived as silos anymore. In short, COVID-19 has accelerated the pace of network transformation which will transform to self-healing/self-driving networks of tomorrow.”

IDC India Forecast

The Ethernet Switch, Router, and WLAN markets are expected to grow in single digits in terms of compound annual growth rate (CAGR) for 2018–2023. 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.