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Enterprise spending on network campus switches rebounding after COVID

News

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

New research by Dell'Oro group finds that spending on network campus switches is expected to reach pre-pandemic levels in 2022.

There are some provisos: since issuing its January 2021 five-year forecast report, Dell'Oro published actual shipment and revenue data for 2020 and the first quarter of 2021.

It turns out that 2020 revenues were below that forecasted in the January 2021 report, but Dell'Oro has still raised its 2021 forecast from 2% growth to 3% growth because of strong market performance.

Public sector rebounds

In Q1, revenue rose 4% over the same period last year, although Dell'Oro notes that some of that growth in 1Q21 could reflect pent-up demand and mostly came from the public sector.

The private sector is yet to recover, but the analyst house thinks this will lead to more growth in the remainder of the year and potentially into next year.  

Funding around the world lifted public sector spending on network campus switches in 1Q21 and is expected to continue to stimulate market growth for many quarters – and possibly years – to come.

Dell'Oro also says projected growth in 2021 will be propelled by improving macroeconomic outlooks: recent GDP reports from the world’s leading banks have raised their growth projections for 2021 and 2022.

Market growth in 2022 is expected to exceed the 2019 pre-pandemic revenue level, despite the effects of working from home on the market and further cannibalisation from WLAN.

Some benefits to the market

Dell'Oro notes the pandemic also brought some benefits to this market sector:
•  Accelerated pace of digital transformation initiatives – although most 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 power over Ethernet (PoE) ports, driven by IoT devices, to account for about half of all ports by 2025. Dell'Oro expect this trend to help boost market average selling prices too.
• Faster refresh cycles for campus switches driven by digital transformation to add functions including automation, security, visibility, and analytics/intelligence.