Router and switch market to rebound after 6% decline in 2024

The Service Provider Router and Aggregation Switch market is predicted to return to growth after undergoing an inventory correction in 2024, according Dell’Oro.The expected market decline in 2024 is 6 percent.

“Inventory correction is a simplified way to describe what is occurring in the service provider router market,” stated Jimmy Yu, Vice President at Dell’Oro Group. “However, it does not paint the full picture because there are a couple other factors underlying the decline. One is the slowdown in access network deployments since fewer 5G and PON deployments translate to fewer routers. The second is inflation or the higher cost to service providers that ultimately reduces demand and thereby shrinks the market. And for service providers, the higher cost goes beyond just the cost of equipment. It includes the cost of labor to procure and install equipment, as well as the cost of capital that is influenced by higher interest rates. In addition, service providers need to consider future demand for their network services that usually ebb and flow with the economy. We think much of this settles out by the end of 2024, and, therefore, view 2024 as a year that sets the market up for a return to growth,” added Yu.

Additional highlights from the Service Provider Router and Switch 5-Year July 2024 Forecast Report:

• Service Provider Router and Aggregation Switch market is forecast to grow at an average annual rate of 3 percent, following the market contraction in 2024.
• Cloud service provider demand is predicted to outpace that of Telecom and Cable service providers for the next five years.

Dell’Oro