Dell’Oro Group on Tuesday revealed findings from its global 1Q 2023 Service Provider Router and Switch Report. According to the report, the market saw extraordinarily strong growth in the quarter fueled by hyperscalers and unleashed component supply. Equipment vendors were finally able to fulfill orders and catch up on backlogs.
Additional highlights from the report include:
- In 1Q 2023, we saw double-digit market growth across all regions except EMEA, which declined. North America led the market with sizable growth, followed by the CALA (Caribbean and Latin America) and APAC.
- Starting 1Q 2023, we separately report 400 Gbps port shipments. The demand for routers supporting 400 Gbps connectivity continued to grow among both Cloud and Telco SPs, and Hyperscale’s demand was particularly strong in this quarter. We estimate 400 Gbps ports compose approximately 5 percent of total port shipments in 2023.
- Within the Edge Router segment, Juniper, Ciena, and ZTE gained share.
Ivaylo Peev, Senior Analyst at Dell’Oro Group
We were caught by surprise as revenues blew through the roof, growing 15 percent year-over-year. Only three times in the past twelve years has the SP Router market increased at this rate. For over two years, component supplies have constrained vendors’ ability to fulfill orders, and orders were piling to record levels. For the short-term outlook, we may see another quarter of strong growth, but do not expect it to be sustainable as customers need time to digest inventory, and the bulk of the market deployments come from Telecom SPs which refresh their networks at a steady pace... We have seen particular strength recently from Hyperscalers in North America which deploy routers to interconnect geographically dispersed facilities, to connect to Telecom SP wide area networks, and to connect inside the data centers. Within the data center, we are seeing a significant increase towards high-speed network connectivity such as 200 Gbps and 400 Gbps Ethernet switch deployments, which in turn have a cascading effect on the network core. Top router manufacturers benefited from this trend, of notable mention Cisco gained two-share points during the quarter, climbing to its highest level since 1Q 2019,
