Dell’Oro: PONs boost Broadband Access; Total Telecom & Enterprise Network Equipment Markets
According to a newly published report by Dell’Oro Group, total global revenue for the Broadband Access equipment market increased to $16.3B in 2021, up 12 percent year-over-year (Y/Y). Growth came once again from spending on both PON infrastructure and fixed wireless CPE.
“2021 was a record year for PON (Passive Optical Network) equipment spending, with some of the highest growth coming from the North American market, where expansion projects and fiber overbuilds are picking up considerably,” said Jeff Heynen, Vice President, Broadband Access and Home Networking at Dell’Oro Group. “These fiber expansion projects show no signs of slowing heading into 2022.”
Additional highlights from the 4Q 2021 Broadband Access and Home Networking quarterly report:
- Total cable access concentrator revenue increased 4 percent Y/Y to just over $1B. Steady growth in Distributed Access Architecture (DAA) deployments helps offset declines in traditional CCAP licenses.
- Total PON ONT unit shipments reached a record 140 M units for the year, bucking the supply chain constraints that have dogged the cable CPE market.
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Separately, Dell’Oro just completed the 4Q2021 reports for all the Telecom Infrastructure programs covered, including Broadband Access, Microwave & Optical Transport, Mobile Core Network (MCN), Radio Access Network (RAN), and SP Router & Switch. The data contained in these reports suggests that total year-over-year (Y/Y) revenue growth slowed in the fourth quarter to 2%, however, this was not enough to derail full-year trends.
The market research firm estimates suggest the overall telecom equipment market advanced 7% in 2021, recording a fourth consecutive year of growth, underpinned by surging wireless revenues and healthy demand for wireline-related equipment spurred on by double-digit growth both in RAN and Broadband Access. Total worldwide telecom equipment revenues approached $100 B, up more than 20% since 2017.
In addition to challenging comparisons, we attribute the weaker momentum in the fourth quarter to external factors including COVID-19 restrictions and supply chain disruptions.
The analysis contained in these reports suggests the collective global share of the leading suppliers remained relatively stable between 2020 and 2021, with the top seven vendors comprising around 80% of the total market.
Despite U.S. sanctions, Huawei continued to lead the global market, underscoring its grip on the Chinese market, depth of its telecom portfolio, and resiliency with existing footprints. Initial readings suggest the playing field is more even outside of China, with Ericsson and Nokia essentially tied at 20% and Huawei accounting for around 18% of the market.
The relative growth rates have been revised upward for 2022 to reflect new supply chain and capex data. Still, global telecom equipment growth is expected to moderate from 7% in 2021 to 4% in 2022.
Risks are broadly balanced. In addition to the direct and indirect impact of the war in Ukraine and the broader implications across Europe and the world, the industry is still contending with COVID-19 restrictions and supply chain disruptions. At the same time, wireless capex is expected to surge in the U.S. this year.
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Top 10 Enterprise Network Equipment Vendors:
References:
Key Takeaways—2021 Total Enterprise Network Equipment Market
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Dell’Oro Group has completed its 4Q21 reporting for enterprise network equipment programs, which include campus switches, enterprise data center switches, SD-WAN & enterprise routers, network security, and Wireless LAN. Enterprises include businesses of all sizes as well as government, education, and research entities. The equipment tracked in these programs can be used for wired or wireless data communication in private and secure networks.
Sales Hit Record Level in 2021:
Despite a macro-economic environment that continues to be defined by supply constraints, our reports showed a strong rebound in the overall Enterprise Network Equipment market in 2021, following some stagnation in the prior year. Sales jumped 12% year-over-year (Y/Y), propelling the market to a record- level in 2021.
The strong performance was broad-based across all technology segments. Enterprise Routers, Wireless LAN, and Network Security were all up double-digits. In the meantime, Campus and Enterprise Data Center Switches were up mid-to-high single digits. All technology segments hit record-revenue level in 2021.
Dell’Oro calculated that spending on enterprise network equipment rose by nearly $6.0 B in 2021. Security accounted for 40% of the increase in spending, while campus switches accounted for a quarter of the increase.
The market research firm attributes this broad-based recovery to the following:
-Continuing improvement in macro-economic conditions.
-Continuing government spending and stimulus around the world.
-Network upgrades in preparation for workers returning to the office full or part-time.
-Digital transformation initiatives, accelerated by the pandemic, are driving new network requirements and putting pressure on IT managers to upgrade their networks and add different security layers.
-Orders pulled in from future quarters, to mitigate ongoing supply challenges that are adversely affecting product availability, lead times, and prices.
The 2021 robust performance in the Enterprise Network Equipment market was broad-based across all regions, except the Caribbean and Latin America, which was flattish (although showing a significant improvement from the high-single-digit decline registered last year).
Cisco Loses Some Ground — Still Leads the Enterprise Network Equipment Market:
The analysis shared in our reports showed no major change in vendors’ ranking. Cisco remains the only vendor with more than 10% share in the market, although the firm lost three points of revenue share in 2021. This share loss was broad-based across all technology segments, except WLAN. In the meantime, HPE Aruba, Palo Alto Networks, Fortinet, H3C, and Arista, gained one point of revenue share, each.
Nevertheless, we would like to note that the vendor landscape continues to be defined by a challenging supply environment and that some of the share shifts witnessed in 2021 may not be necessarily reflective of competitive displacement, but rather the timing of order fulfillment.
Robust Market Outlook for 2022:
Despite a challenging supply environment that is expected to persist through most of 2022, Dell’Oro analysts are projecting strong double-digit revenue growth in the Enterprise Network Equipment market in 2022. This optimism is underpinned by healthy outlooks provided by most vendors as a result of increased visibility and robust backlogs. Additionally, ongoing supply challenges will continue to encourage customers to place advance orders, which will have a positive effect on bookings first, then a few months later, on revenues, depending on lead times.
Dell’Oro Group Enterprise Network Equipment research programs consist of the following: Campus switches, Enterprise Data Center Switches, SD-WAN & Enterprise Routers, Network Security, and Wireless LAN.
https://www.delloro.com/key-takeaways-2021-total-enterprise-network-equipment-market/