5-Year Forecast: Enterprise Spending on Network Campus Switches to Recover in 2021 with a Return to 2019 Pre-Pandemic level in 2022

Power-over-Ethernet ports are forecast to compose nearly 50% of campus switch ports by 2025

Since issuing our January 2021 five-year forecast report, we have published actual shipment and revenue data for 2020 and the first quarter of 2021. (Note that vendors did not report full-year 2020 financial results until after our January 2021 report was published.) 2020 revenue came in below the revenue forecast published in our January 2021 report. Nonetheless, we have raised our 2021 forecast from 2% growth to 3% growth.

Our more optimistic 2021 outlook is prompted by strong market performance that has so far exceeded our expectations. (1Q21 revenue was up 4% Y/Y in contrast with our flat-market forecast.) Although some of the growth in 1Q21 might have been reflective of pent-up demand, it came mostly from the public sector, while the private sector has not recovered yet, paving the way for more growth in the remainder of the year and potentially next year.  Funding around the world lifted public sector performance in 1Q21 and is expected to continue to stimulate market growth for many quarters – and possibly years – to come.

Last but not least, projected growth in 2021 will be propelled by ongoing improved macroeconomic outlooks. Recent GDP reports indicate that economists at the world’s leading banks have raised their growth projections for both 2021 and 2022.

Looking beyond, we expect the market to continue to grow in 2022, exceeding its 2019 pre-pandemic revenue level. In 2022, we expect growth to accelerate from 2021, due to pent-up demand from the verticals most greatly affected by the pandemic.

Despite the potential downside impact from COVID-19, such as work from home and further cannibalization from WLAN, we expect the pandemic to bring some upside impact, including:

• Accelerated pace of digital transformation initiatives. Although the majority of IoT devices will be wireless, some devices – such as security cameras, industrial lighting, and some sensors – are expected to remain on wired Ethernet.
• Greater share of higher-priced PoE devices. We expect IoT devices to drive an increased share of higher-priced PoE ports. We currently project PoE ports to compose nearly half of all ports by 2025. We expect this trend to help boost market average selling prices (ASPs).
• Accelerated pace of the campus switch refresh cycle. We expect the adoption of digital transformation to accelerate the pace of the campus switch refresh cycle. In order to enable digital transformation, the network must undergo numerous changes. Automation, security, visibility, and analytics/intelligence are added functionalities that IT managers need for the new digital era.

In our campus switch five-year forecast report, we explore the methodology used to quantify the pandemic’s upside and downside risks. Additionally, our interviews with end-users, system integrators, and VARs revealed an increased interest in Network as a Service (NaaS) during the pandemic. We expect this interest will persist after the pandemic ends.

To access the full report for revenue, units, pricing, and relevant segmentation, including regions and vertical markets, please contact us at dgsales@delloro.com

About the Report The Dell’Oro Group Ethernet Switch – Campus Five-Year Forecast Report offers a complete overview of Ethernet switches built and optimized for deployment outside the data center to connect users and things to Local Area Networks. The report provides tables covering manufacturers’ revenue, average selling prices, and port/unit shipments by Ethernet and Gigabit speed (Fast and 2.5, 5.0, 25, 10, 40, 50, and 100 Gigabit Ethernet). Regional breakouts and Power Over Ethernet (PoE) are also included.