Strong SP Router Market Growth in North America and CALA in 2022, According to Dell’Oro Group

REDWOOD CITY, Calif. – March 14, 2023 – According to a recently published report by Dell’Oro Group, the trusted source for market information about the telecommunications, security, networks, and data center industries, the worldwide Service Provider (SP) Router and Switch market eclipsed $14 B in 2022. North America led the worldwide market, with double-digit growth followed by accelerated growth in the Caribbean and Latin America (CALA) region, which offset market declines in Europe, the Middle East and Africa (EMEA), and Asia-Pacific (APAC). Steep falloff in China led to a double-digit revenue decline in APAC.

“In North America, sustained demand for IP routers drove the market as Telecom and Cloud SPs continued upgrading their networks with products providing 400 Gbps technology capabilities and expanding network capacity to accommodate increasing traffic levels,” said Ivaylo Peev, Senior Analyst at Dell’Oro Group. “CALA’s SP Router market surprised us with exceptional performance in 2022, recording 15 percent year-over-year growth. The region’s growth reflected Telecom SPs increasing investments in 5G buildouts, as well as in mobile backhaul infrastructure in Brazil, Columbia, Mexico, and Puerto Rico. In addition, strong demand for residential broadband across the region led to meaningful revenue contributions.

“We believe that the limited access of Chinese router vendors to 400 Gbps-capable ASICs is another key factor that is depressing investments in SP Core networks across China, because operators want to upgrade their networks with the newest available technology. A slowdown of 5G network buildouts and the associated expansion of mobile backhaul networks in China were responsible for the decline of APAC’s SP Edge and Aggregation Switch segment in 2022. We expected investments to shift to SP core and metro networks, but delays in the planning of China’s SP core network expansions triggered a decline in China’s  Core Router segment in 2H 2022,” continued Peev.

Additional highlights from Dell’Oro Group’s 4Q 2022 Service Provider Router and Switch Report:

• Cisco was the top-ranked vendor for the worldwide SP Router and Switch market in 2022 followed by Huawei, Nokia, Juniper, and ZTE, in ranked order. Juniper, Ciena, and Cisco gained the largest market share in 2022.
• Juniper’s success was driven by a refreshed MX product family with the firm’s new ASIC, named “Trio-6”. Key contributors were the MX 10000 series chassis and the new small form factor MX304 router, which accelerated adoption in 2H 2022. We classify these products in the SP Edge Router and Aggregation Switch segments.
• Ciena’s double-digit revenue growth was based on an expansion of it’s SP Router and Switch portfolio (e.g., 8100 series Coherent Aggregation Router), and strong adoption of the firm’s Vyatta software within AT&T’s disaggregated routing project.
• Cisco’s strength was in the SP Core Router segment, predominately in North America. Growth was driven by the 8000 series router, which augments the flagship NCS5500 series router. We see this as a successful product transition.