COVID impacts India’s networking market

India’s networking market which includes Ethernet Switch, Routers, and WLAN segments witnessed a 9.6 per cent year-over-year (YoY) decline in Q2 2020 (April – June 2020), reports global analyst firm IDC.

It expects Q3 (July-September 2020) to also follow the same trendline due to the lack of business activity in Q2 translating into declined shipments.

A decline in the switch market was mainly due to a reduction in investments for campus infrastructure.

Business was characterised by regular refreshes from verticals like banking, telecommunications, and professional services.

Router market saw a decline of 5.5 per cent YoY; however, the quarter-over-quarter (QoQ) decline was only 1.2 per cent. The spending from telecom vendors to support remote working needs majorly contributed to the business in this segment.

While Wi-Fi 6 has started to gain significant traction in India, the overall WLAN market declined by 4.6 per cent. Though the enterprise WLAN market saw a significant decline, the decline was offset by the growth of consumer gateway routers. The sudden demand in consumer gateway routers could be attributed to employees working from home and students taking online classes during the lockdown.

India Ethernet Switch Market Q2 2020

According to IDC’s Worldwide Quarterly Ethernet Switch Tracker, the Q2 2020 Ethernet Switch market in India stood at US$120.8 million (by vendor revenue) registering a YoY decline of 13.8 per cent.

A sudden drop in campus switch requirements reduced spending across major industry verticals. Supply chain issues were also aggravated due to the complete lockdown that happened during most part of the second quarter.

Key industry verticals that contributed to the Q2 switch market business were professional services, telecom, and banking. Except for a few budgeted government deals, most were deferred to later part of the year. Industries like manufacturing and education also saw a significant decline in switching investments.

Cisco continued to dominate the Ethernet Switch market with a 64.6 per cent share during Q2 2020, followed by Hewlett Packard Enterprise (HPE) and Huawei.

India Router Market Q2 2020

According to IDC’s Worldwide Quarterly Router Tracker , the India Router market in Q2 2020 stood at US$68.4 million (by vendor revenue) with a YoY decline of 5.5 per cent. Spending from telecom vendors continued to be steady to support the work from home bandwidth requirements. However, enterprise routing demand declined significantly by 15 per cent YoY.

Banking and Professional services were the key enterprise verticals that contributed to the demand in the second quarter.

Cisco leads the router market with 65.8 per cent market share in Q2 2020 followed by Nokia and Juniper.

India WLAN Market Q2 2020

According to IDC’s Worldwide Quarterly Wireless LAN Tracker , the Indian WLAN market had a YoY decline of 4.6 per cent during Q2 2020. The market stood at USD 54.1 million (by vendor revenue) majorly contributed by consumer gateway routers.

While enterprise-class WLAN took a significant decline of 18.7 per cent YoY, the consumer gateway router demand picked rapidly by 13.1 per cent YoY to support the growing demand of employees and students working out of their homes.

Lower demand for campus infrastructure caused a steep decline in the enterprise WLAN segment.

With a market share of 20 per cent, Cisco retained the market leader position in the WLAN segment during Q2 2020, followed by TP-Link and D-Link due to the rapid increase in demand for consumer gateway routers, said Sudharsan Raghunathan, senior market analyst, Enterprise Networking at IDC India.

“The pandemic has reinstated the fact that the internet has the potential to become the next network and the cloud will become the future data centres,” he said. “Network vendors have started to focus on technologies and product innovations capable of seamlessly connecting and securing cloud traffic.”

A lot of focus has also moved around management and orchestration of network devices, noted Raghunathan.

“Given the impact of the pandemic, vendors are focusing around building cloud-based management and orchestration layers (compatible with multiple cloud platforms) that provide unified management across all the devices under their portfolio through a single pane of the glass thereby enabling easier provisioning and management,” he said.

IDC India Forecast

The Ethernet Switch, Router, and WLAN market are expected to grow in single digits in terms of compound annual growth rate (CAGR) for 2018–2023. Increased adoption of emerging technologies such as cloud, IoT, mobility, etc. would drive incremental revenues. IDC also expects large investments for 5G rollouts in the next couple of years.