A strong fourth quarter for enterprise router sales was not enough to lift the global market to growth in 2014. Sales declined 3% for the year, dragged down by poor performance in the first three quarters, according to IHS.
The decline in revenue followed a strong year for enterprise routers in 2013, when revenue grew 6%. Matthias Machowinski, directing analyst for enterprise networks and video at IHS, says that the decline in revenue was the result of a challenging capital expenditure environment at service providers in North America and Europe.
In the fourth quarter of 2014, enterprise router revenue totaled $974 million, a 4% increase sequentially but down 3% from the same quarter a year ago. Revenue growth in the fourth quarter was brought down by average selling prices (ASPs) declining in the branch and mid-range categories, IHS says.
“High-end routers continue to do well, driven by new data center deployments and large enterprise headquarters upgrades, but the mid-range and branch office segments both declined due to a focus on cost reduction and shifting preferences to low-end routers,” Machowinski says.
IHS’ analysis into the enterprise router market in 2014 also found:
- Asia Pacific was the top performing region, with China leading the way and Japan returning to growth.
- Cisco was the No. 1 supplier of enterprise routers during the year, with HP in second place and Brocade in third.
- ZTE’s sales more than tripled during the year, while Huawei ended the year strong with an end-of-year buying spree in China.
- Virtual routers could pose a long term threat to enterprise routers as they become more attractive to service providers as a way to reduce CPE costs and deploy new services quickly.
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