Ethernet Switching Market Share: Did HP eat up that much share from Cisco?

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By Mary Gabra, Manager, Market and Competitive Intelligence, HP Networking

For those that follow my blogs, I am back again this quarter after Dell’Oro Group just published its Q2CY2012 market share report on Ethernet switching.  This quarter is remarkable, especially for the 800-pound gorilla.  It is not just a quarter that Cisco saw a share decline Q/Q and Y/Y, but it is a quarter that Cisco reached its lowest share it has ever got to since 2002! That is noteworthy, right?  I bet you Cisco never saw that day coming where competition would be that strong to make it lose a market position it has owned for many years. 

Looking back at Ethernet switching market share and market shifts

Let me share with you some market share numbers to show you what I mean by this interesting quarter that brought Cisco back 10 years.  In 2QCY2012, Cisco’s Ethernet switching share was 66.0%.  The last time Cisco’s share was at that level was in 2002.  Since 2002, Cisco’s share grew and it reached its peak of 73.8% in the third quarter of 2006.  Now, the last five years or so have been interesting for Cisco.  Cisco started experiencing a declining trend in its share.  Why? Competitors started to grab share.  Also, the recession in 2008 helped in having enterprises seek alternatives that could be more cost effective.  In 2010, when HP bought 3Com, their market share combined became in the double digits and HP became the clear #2 in networking with distant #3s.

So, if we take a look at the trend since 2007 till today, you will see how Cisco took a hit, going down from the 73% share range to this 66% in the last quarter.  On the other hand, HP’s share trend has been positive, earning customers and growing consistently from 8% in 2007 to 11.5% this quarter.  

There are other vendors that experienced growth over this time span, such as Juniper who joined this market in 2008 and Huawei who is a very recent entrant as well.  However, these players are still in the 2-3% share range.

The point I am trying to make here is the market has changed.  It is a competitive market with multiple players.  HP is the most established competitor with the largest share of all competitors.  Actually, HP’s revenue is larger than the revenue of its next 5 competitors combined.

HP Networking on a growth path in the networking market

With the momentum HP has been having and the consistent slew of large enterprise wins across all regions, HP’s share is on a growth path in the networking market.  If you want to learn more about the kind of customers HP has been winning, check out my blogs on “Bells are ringing at HP Networking“ and my other blog showing examples of some of the customers HP took from Cisco.  Also, worth noting is this quarter marks the highest revenue ever for HP Networking’s Ethernet switching business, showing how HP continues to win the confidence of large enterprises.

 I am aware that market share changes quarter after quarter and perhaps, this quarter was a rough one for Cisco and it will go up again next quarter, especially that their year end positively impacts 3Q share, but I just wanted to point out that seeing the share go its lowest in 40 quarters (10 years * 4 quarters a year) is definitely remarkable.  I will continue to monitor this market closely and keep you posted in the next quarters.

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