- The effects of Covid are still being felt in the campus Ethernet switch market
- Cisco’s campus switch revenues in Q1 were down significantly year over year
- Arista and Ubiquiti were the only companies with slight campus switch revenue increases
Worldwide campus switch revenues plummeted by 23% in the first quarter 2024 compared to the previous year, according to research from Dell’Oro Group. The only two vendors that grew campus switch revenues year over year were Arista and Ubiquiti. Cisco’s campus switch revenues fell more than the worldwide average.
Campus Ethernet switches are primarily used for Wi-Fi access points in environments such as offices, schools, government facilities: anyplace that needs wired connectivity for a local area network. “Basically, campus switches are really the networking gear to connect users and devices and laptops,” said Sameh Boujelbene, VP with Dell’Oro Group. “Access points are probably the number one application.”
Siân Morgan, research director at Dell’Oro Group, said the decline in revenues during Q1 actually stemmed from Covid. During the pandemic, campus switches were in short supply. Panicking that they might not have access to the switches they needed, companies over ordered. (It was kind of analogous to the stockpiling of toilet paper we saw in the consumer realm).
Switch manufacturers rushed to meet the demand. But now, their year-over-year revenues are down because their customers are working through all the excess inventory.
“There was so much delivered in a short amount of time, it’s taken a while for enterprises to absorb,” said Morgan.
The situation is comparable to what happened to Ericsson and Nokia in the wireless space, where carriers stockpiled 5G gear during the pandemic.
In the case of campus Ethernet switches, Cisco took the biggest hit during the most recent quarter.
Dell’Oro’s research shows that Cisco’s campus Ethernet switch revenues dropped more than the global average. “This reduction contrasts with their shipments in 2023, when Cisco opened the ‘floodgate’ for Catalyst and Meraki port shipments, which had been on backorder,” said Morgan.
In its most recent quarter Cisco reported total revenue of $12.7 billion. Its Network business is by far its largest business group, accounting for $6.5 billion of revenue during the quarter. And within its Network business, about $2.3 billion of revenues were attributable to campus Ethernet switches.
Arista and Ubiquiti
Meanwhile, Arista had its third sequential quarter of growing campus switch sales to large enterprises.
Morgan said Arista’s strength has always been in data center switching, with campus switching being a newer and smaller market for the company.
“Because of their strength in data center they have this existing base of customers they can easily expand to,” she said.
Ubiquiti is a low-cost equipment provider that is appealing to the price-sensitive market. “They also went through a digestion period, but seemed to have recovered very nicely last quarter,” said Morgan.