India’s entire networking market comprising Ethernet Switch, Routers, and WLAN segments, has witnessed a 4.2% year-on-year (YoY) decline in Q4 2020 (Oct-Dec) according to latest report by International Data Corporation (IDC).
The results of Q4 2020 was majorly characterized by the decline in switching revenues as the switching business in India dropped by 11.1% YoY during the quarter.
The routing market stood stagnant with a marginal decline of 1% YoY. However, from a sequential standpoint, the router market expanded by 30% during Q4 2020 mainly attributed by the telecom service providers.
Despite a growth of 8.8% in the WLAN segment, the enterprise class WLAN segment continues to remain the most affected networking segment with a significant decline of 26.3% YoY owing to the slowdown in campus investment caused by COVID-19.
However, the sluggish enterprise class market was compensated by the growth of consumer gateway routers with a staggering 57.8% YoY growth during Q4 2020. The growth in the consumer gateway routers was due to the remote working and online schooling requirements.
The ADC market also posed a significant growth during Q4 2020 with a YoY growth of 22.9%. The ADC segment is starting to see good traction in terms of virtual appliances for catering to the workloads shifting to the cloud. Key verticals for the ADC business include banking, professional services, and government.
Decline in the switching segment was majorly characterized by the Non-DC segment. The decline was due to the COVID impact and variations in refresh cycles.
Professional services, manufacturing, and banking were some of the key business verticals that maintained their spending. Manufacturing showed strong signs of recovery with investments from multiple sub-segments like automobiles, pharma, hi-tech, etc. However, government business continued to be slow with some key business being pushed to CY 2021.
Despite the market showing signs of recovery, business returning to pre-COVID levels is still uncertain with India suspected to move into the second wave of the pandemic.
However, from a sequential point of view the market grew by 30% majorly driven by the telecom service providers. Telecom vendor investments were directly proportional to the additional bandwidth requirements driven by the work from home scenario.
Professional services and banking were the key business verticals during Q4 2020 while the investment from government remained slow during the same period. Business for routers is expected to recover too with telecom vendors investing for 5G rollouts in India.
While enterprise class WLAN took a significant decline of 26.3% YoY, the consumer gateway router demand rose rapidly by 57.8% YoY to support the growing demand of employees and students working out of their homes.
Enterprise class WLAN remains to be most affected segment since the COVID-19 driven lockdown owing to the drop in campus investments. However, the market is opening with multiple enterprises looking out to adopt cloud-driven WLAN that will enable management efficiency.
Manufacturing and professional services are the top verticals contributing to the enterprise WLAN business with investments coming from automobiles, and pharmaceutical enterprises. Business from other key verticals like government and education remained slow.
With a market share of 33.2%, TP-Link was the market leader in the WLAN segment during Q4 2020, followed by D-Link due to the rapid increase in demand for consumer gateway routers. Cisco and Hewlett Packard Enterprise were the key vendors driving the market for enterprise class WLAN during Q4 2020.
Sudharsan Raghunathan , Senior Market Analyst, Enterprise Networking, IDC India says, “With more and more applications moving into cloud, the demand for software defined technologies like SD-WAN is gaining significant adoption in India. The networking ecosystem is undergoing a paradigm shift in terms of vendors partnering with multiple cloud providers that enable seamless access to IaaS and SaaS applications in a secured manner.
“The usage of on-ramps for cloud has played a very important role in connecting branch sites to cloud applications effectively. The prolonging remote working scenario will also promote more cloud delivered models of SD-WAN wherein employees working from home would be able to access cloud applications without hardware dependency,” he explained.
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.