Shipment term

Despite price hikes and shipping issues, India’s enterprise networking market grew 6.9% YoY in 1Q22; IDC reports

INDIA, June 29, 2022 – India’s enterprise networking market, which includes Ethernet switches, routers and WLAN segments, recorded a 6.9% year-on-year (YoY) growth in terms of network revenue suppliers during 1Q22 (January-March).

The network vendor ecosystem continued to face component shortage issues associated with rising logistics costs and a weakening rupee against the dollar. Although year-over-year growth was recorded at 6.9%, the average cost of all network equipment saw low double-digit percentage growth, which dampened the number of units shipped. The shipping time for network equipment is currently in the order of 30 to 35 weeks. With the Russian-Ukrainian conflict protracted, the timelines are expected to remain the same for at least three quarters from now. IDC expects the next few quarters to see steady market growth as vendors try to work through shipping delays.

Switching business in India grew 17.6% year-over-year in 1Q22. The non-DC switching business recorded year-on-year growth of 14.2% due to the professional services segment spending on pent-up demand after offices resumed in India. DC switching saw strong growth of 22.5% YoY in 1Q22 due to weak DC switching growth in 1Q21. The main industries that contributed to the change in activity include services, finance and manufacturing.

India’s router market fell 14.7% in 1Q22. Service providers contributed 63.4% of investment in routers. Both enterprise and service provider routing saw declines, with enterprise registering a steep decline of 26.4% and service provider a drop of 6.1%. Besides telecommunications, other key verticals for routing include finance, services, and manufacturing.

The WLAN segment grew 9.1% YoY in 1Q22. While enterprise WLAN has surged with pent-up demand from organizations, consumer wireless demand has eased as offices reopened across the country. The enterprise WLAN segment showed very strong growth of 38.5% year-on-year, while consumer WLAN decreased by 20.8% year-on-year. Cloud managed wireless has been well received in India due to its ease of deployment and manageability.

India Ethernet Switch Market 1Q22

According to IDC’s Worldwide Quarterly Ethernet Switch Tracker, India’s 1Q22 Ethernet switch market was worth $156.8 million (by vendor revenue), recording strong year-on-year growth of 17.6%. The steady growth in revenue revenue is mainly due to vendors clearing their backlogs which now span 8-12 months. Switching was the hardest hit category due to component shortages. The service industry was the main contributor due to investments in hybrid working and businesses planning ahead for their infrastructure demand amid shipping delays. Business investment in non-DC switching increased 14.2% year-on-year. The DC switching segment grew by 22.5% year-on-year, mainly due to the one-time drop last year (1Q21). Services, financials, industrials, telecommunications and government were the main contributors in 1Q22.

Cisco continues to lead the Ethernet switch market with a 56.3% market share in 1Q22, followed by Juniper and Hewlett Packard Enterprise (HPE).

India router market 1Q22

According to IDC’s Worldwide Quarterly Router Tracker, India’s router market fell sharply in 1Q22 to $61.8 million (by vendor revenue), with a year-on-year decline of 14.7 %. Investment in service provider routers was down 6.1%, with more investment focused on upgrades and capacity optimization. IDC does not expect very large investments in routers from service providers before 5G due to the ability to leverage existing investments that have been invested in 4G. Business investment in router hardware also fell 26.4% year-on-year. Banking was the leading vertical for enterprise deployment with investments targeting regular refreshes and SD-WAN deployments. Besides telecommunications, the main areas of investment included finance, services and manufacturing.

Cisco leads the router market with a 62.2% market share in 1Q22, followed by Juniper and Nokia.

Indian WLAN market 1Q22

According to IDC’s Worldwide Quarterly Wireless LAN Tracker, India’s WLAN market grew by 9.1% YoY in 1Q22, driven primarily by the enterprise wireless segment. The deal was worth $63.6 million (per Vendor Revenue).

Activity in the enterprise wireless segment experienced strong annual growth of 38.5%. The services vertical, mainly characterized by IT/ITES, software majors, consulting, e-commerce, etc. doubled its revenue share (compared to 1Q21). The main reasons were due to hybrid working, regular refreshes and pre-planning for the purchase of infrastructure given the current delays. The education sector has seen its spending on wireless infrastructure after a long sleep caused by COVID-19. Cloud-managed wireless has gained ground with easier deployment and management. The cloud-managed wallet was seen as an effective alternative to the traditional vendor endpoint wallet due to growing delays in shipments.

With offices starting to operate in hybrid mode, consumer gateway routers decreased by 20.8%. Wi-Fi 5 (AC) continued to dominate the consumer router segment, followed by N. AX began to gain momentum in the consumer segment with ISPs and online channels. However, AX is still not common and is only used in low latency use cases.

With a market share of 24.9%, TP-Link was the market leader in the WLAN segment during 1Q22. In the enterprise-class WLAN segment, Cisco was the market leader with 24.1% market share, followed by Hewlett Packard Enterprise (HPE) with 22.5%.

Sudharsan Raghunathan, Senior Market Analyst, Enterprise Networking, IDC India said, “India’s networking market (in terms of vendor revenue) is expected to experience gradual and steady growth over the coming quarters. However, the growth cannot be interpreted directly as an increase in demand. Due to rising network infrastructure prices caused by multiple reasons such as weakening of the Rupee against the Dollar, rising transportation/logistics costs and worsening component shortage scenario, Supplier revenue will continue to grow at a higher rate relative to units that are being shipped. That said, IDC doesn’t expect demand to have a negative impact given the vitality that networking hardware brings to business continuity. IDC expects this trend to lead to flexible managed services/subscription-based models that will effectively meet enterprise demand.

IDC India Forecast

The Ethernet Switches, Routers and WLANs Markets are expected to grow by single digits in terms of compound annual growth rate (CAGR) for 2021-2026. Increased adoption of emerging technologies such as cloud, IoT, mobility, etc. would generate additional revenue. IDC is also planning significant investments for 5G deployments over the next two years.

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Companies covered

Twitter, Inc., Cisco Systems Inc., Nokia Corporation, Hewlett Packard Enterprise, LinkedIn Corporation, Enterprise Networking Solutions, Inc.

Regions covered

Asia-Pacific, India, Russia

Topics Covered

COVID-19, Cloud Management, Ethernet and USB, Ethernet Switch, Failover and Failback, Governance, Hardware, Mobility, Routers, WiFi, WAPI, Wireless LAN Infrastructure