Stronger 2023 Outlook but Steeper “Digestion” Expected in 2024
REDWOOD CITY, Calif. – July 25, 2023 – According to a recently published report by Dell’Oro Group, the trusted source for information about the telecommunications, security, networks, and data center industries, more than $100 B will be spent on campus switches over the next five years. Additionally, we have raised our outlook for the 2023 revenue growth while, at the same time, revised our forecast for 2024 to show a steeper decline than what we initially projected in our prior forecast report.
“Given the sustained high level of backlog combined with the unexpectedly rapid improvement in supply, we have raised our revenue forecast for 2023 to show a high-single digit growth in this market. It is worth noting that this projection comes despite a tough comparison with 2022 during which the market experienced a robust double-digit growth,” said Sameh Boujelbene, Vice President at Dell’Oro Group. “As we head into 2024, however, the top-of-mind question is whether we should expect a correction in the market following two extraordinary years in sales performance and, if so, how steep that correction might be. We examined historical trends and interviewed various system vendors, Value-Added Resellers and System Integrators and are currently forecasting a high-single digit decline in the campus switch market in 2024.
“While challenges such as backlog normalization, capacity digestion, and spending optimization may temporarily impact market growth in 2024, we expect a fast recovery and long-term growth in the following years. This growth trajectory will be propelled by several tailwinds, including an accelerated pace of digital transformation, a greater portion of high-priced Power-Over-Ethernet (PoE) devices, and the need for faster network speeds,” added Boujelbene.
Additional highlights from the Ethernet Switch – Campus 5-Year July 2023 Forecast Report:
- 5/5.0 Gbps is expected to drive 15 percent of the campus switch sales by 2027.
- PoE ports are forecast to comprise more than half of the total campus switch port shipments by 2027.
- Despite some short-term headwinds, China is expected to gain three points of revenue share over our forecast period.
- The IT/OT convergence is expected to increase over our forecast horizon, but adoption may take time given the very long 10-30 year lifecycle of industrial networking equipment.
- The introduction of Artificial Intelligence capabilities will continue to play a key role in vendors’ competitive positioning in the market.
The Dell’Oro Group Ethernet Switch – Campus 5-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 the Local Area Networks. The report contains tables covering manufacturers’ revenue, average selling prices, and port/unit shipments by speed (100 Mbps, 1/2.5/5/10/25/40/50/100/400 Gbps Ethernet), plus regional breakouts. To purchase this report, please contact dgsales@delloro.com.
Dell’Oro Group is a market research firm that specializes in strategic competitive analysis in the telecommunications, security, enterprise networks, and data center infrastructure markets. Our firm provides in-depth quantitative data and qualitative analysis to facilitate critical, fact-based business decisions. For more information, contact Dell’Oro Group at +1.650.622.9400 or visit www.delloro.com.
# # #
