India’s enterprise networking market grew at 13.6% YoY in Q4 2021: IDC

India’s networking market, which includes the ethernet switch, routers, and WLAN segments, witnessed a 13.6 per cent year-onr-year (YoY) growth in vendor revenues during Q4 of 2021 (October to December), according to a report by market intelligence company IDC.

“With organisations looking to re-open campuses, the investments in the non-DC networking infrastructure have grown significantly over the last few quarters. Having said this, vendors were still seen to be battling with chip shortages, increasing freight costs, increased import costs due to currency fluctuations,” the report said.

“Infrastructure lead times have currently risen to the levels of 26-28 weeks for many vendors and are expected to stay the same for some more quarters to come with the Russia-Ukraine conflict worsening the scenario,” it added.

However, IDC expects the next few quarters to have steady market growth as vendors are looking to clear their shipment backlogs with demand for networking infrastructure appearing very stable.

India Ethernet Switch market 

According to IDC’s Worldwide Quarterly Ethernet Switch Tracker, the Q4-2021 Ethernet Switch market in India stood at $163.1 million (by vendor revenue) recording a YoY growth of 25.7 per cent. The enterprise investment in non-DC switching grew at 41.5 per cent YoY “owing to offices getting ready to reopen post the third wave of Covid-19,” as per the report.

“With hybrid work taking precedence, enterprises are also keen on setting up satellite offices in tier-2 and tier-3 cities to promote employee satisfaction, which is also increasing the demand for non-DC switching equipment. With the semiconductor shortage situation intensifying, enterprises were keen on clearing their backlogs during Q4 2021 to create room for future demand,” it said.

The DC switching segment grew at 9.3 per cent YoY. Services with telecom, manufacturing, and government being the top contributors during Q4 2021.

Cisco continued to lead the Ethernet Switch market with a 54.8-per cent share during Q4 2021, followed by Hewlett Packard Enterprise (HPE) - 5.4 per cent and Juniper - 4.5 per cent. Juniper was followed by Arista and Dell. ODM business in India had a significant growth during Q4 2021 owing to hyper-scaler investments.-

India Router market

As per IDC’s Worldwide Quarterly Router Tracker, the India Router market in Q4 2021 remained stagnant at $75.1 million (by vendor revenue) with a very marginal YoY growth of 0.1 per cent and sequentially declining by 10.6 per cent. The slow growth can be mainly attributed to telecom service providers going slow on router investments.

Service providers contributed to 61.4 per cent of the router investments and were primarily responsible for the decline. Service provider deployments declined 11.1 per cent during the quarter YoY.

As per the report, telecom vendor investments were mostly centred around refreshes, bandwidth optimisation requirements, building edge clouds, investments ahead of 5G rollouts, etc.

The enterprise investment in router hardware grew by 25.1 per cent YoY. 

“Enterprise investments were focused on regular router refreshes and deployments aimed at SD-WAN implementation. Apart from telecom, key investment areas included manufacturing, finance, and services,” it said.

Cisco also led the router market with a 62.8 per cent market share in Q4 2021 followed by Nokia with 15.4 per cent market share and Juniper with 13.8 per cent market share.

India WLAN market 

According to IDC’s Worldwide Quarterly Wireless LAN Tracker, the Indian WLAN market had a marginal YoY growth of 4.5 per cent by vendor revenue during Q4 2021, driven by the enterprise wireless segment. The market stood at $64.5 million (by vendor revenue).

The enterprise WLAN segment exhibited a very strong 45.4 per cent YoY growth and consumer WLAN declined by 22.0 per cent YoY.

The growth in the enterprise segment was driven by enterprises investing in wireless infrastructure ahead of office opening post the third wave of Covid-19. 

“Vendors were also focused on clearing the existing backlogs caused by chip shortages to be able to efficiently cater to future demand. Services organisations were seen investing heavily on spinning up newer locations primarily focusing on wireless connectivity. Cloud-managed wireless was witnessed gathering stream owing to simpler deployment and management,” it said.

Investments from the education vertical rebounded after a long slump caused due to the pandemic. 

The consumer gateway router business declined sharply by 22.0 per cent YoY by vendor revenue. 

“The decline in the gateway router segment was due to offices opening in multiple parts of the country and the festival season coming to an end in India,” as per the report.

“With ISP as the channel, Wi-Fi 6 is starting to get traction in the consumer segment as well. However, the gateway router market is still dominated by Wi-Fi 5 shipments,” it said.

Wi-Fi 6 contributed to 75.7 per cent of access point revenues during Q4 2021 “due to lesser wait times compared to the previous generations of wireless access points.’ 

“The demand for Wi-Fi 6 adoption is fuelled by the exceedingly increasing lead times for previous generations of wireless access points caused by semiconductor shortages,” it said.

With a market share of 24.1 per cent, TP-Link was the market leader in the WLAN segment during Q4 2021. Within the enterprise-class WLAN segment, Cisco was the market leader with a 19.7 per cent market share followed by HPE with 18.1 per cent.

Sudharsan Raghunathan, Senior Market Analyst, Enterprise Networking, IDC India said, “Though vendors were struggling with operational challenges like ever-expanding lead times and increasing input costs, demand for network infrastructure remained healthy. The market for campus investments — both for wired and wireless business — expanded rapidly during Q4 2021.”

“Vertical segments like education, which did not spend for a considerable period, started spending on network infrastructure. Cloud-managed infrastructure was gaining more traction than usual considering the ease of deploying and managing infrastructure specifically in verticals such as services, education, retail, etc. Enterprises are largely beginning to realise the benefit of NaaS as it would help them migrate to an OPEX model without compromising on the quality of service. Network infrastructure vendors are gearing up to cater to specific demands on the enterprises by building easy-to-use management consoles and flexible commercial models as part of their NaaS offerings,” Raghunathan added.

Outlook ahead

The Ethernet Switch, Router, and WLAN markets are expected to grow in single digits in terms of compound annual growth rate (CAGR) for 2021–26. 

“Increased adoption of emerging technologies such as cloud, IoT, mobility, etc. would drive incremental revenues,” IDC said. It also expects large investments for 5G rollouts in the next couple of years.

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