Global Carrier Routing and Switching market declines QoQ but increased YoY

According to ACG Research, the Worldwide Carrier Routing and Switching market decreased quarter over quarter but increased year over year, 5.1% and 5.9%, respectively. The core routing segment posted decrease 9.0% quarter over quarter but slightly up 0.3% year over year.

Although  there was significant softening in the core space carriers continue to address  upgrade issues. The edge/switching also decreased 4.1% q-q but up 7.4% y-y. The  competition in SP edge market is benefiting from the diversity of applications  and solutions, requirement variations in the regions, cross-technology solutions  and the move to 100GE on routers and 100G in optical transport.

"This decline is in line with what we expected; the traditional capex flush  in Q4 is attributed to the decrease in SP routing and switching spending in  Q1.  We are also seeing a shift in capex spending from wireline to  wireless, and as well as the overall allocation for mobility continuing to  increase," states Ray Mota, router and switching analyst, ACG Research.

New and innovative services have and will continue to instigate a shift in  networking. Technologies such as SDN and NFV and what gets virtualized and what  stays physical will impact the transition from equipment to software. The key  drivers will be more than just cost on scale and capacity; service velocity and  increasing average profit per user will also drive this move. During that  transition, established technologies such as Carrier Ethernet and 100G will  drive growth in wireline, and LTE and Small Cells will drive growth in  wireless.

Additionally, vendors will need to address the long-term demand for  high-performance and innovative networks and architectures that address  interconnected data centers. Interconnected data center network architectures  are being reconfigured to respond to traffic volumes and changing traffic  patterns. The architectural challenges include cost effectively accommodating  this rapid traffic expansion, delivering network flexibility, and enabling  service innovation.